We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Mattel Turns Down MGA Entertainment Merger Deal, Stock Up
Read MoreHide Full Article
Shares of Mattel, Inc. (MAT - Free Report) jumped 5.3% yesterday, after the company rejected a merger offer from privately held MGA Entertainment. Notably, this was the second time that Mattel has rejected this offer.
Mattel said that the offer was “not in the best interests of Mattel and its shareholders.” MGA Entertainment CEO, Isaac Larian, renewed offer was based on the condition that following the merger he would become Mattel’s chairman and CEO. He also wanted all of Mattel’s current directors to step down “without any further compensation.”
Although Larian did not reveal the value of the offer, he stated that the proposed deal would be at premium of Mattel’s present market price. Furthermore, he added that Mattel’s problems have intensified since his first merger offer in April, 2018.
Persistent Challenges
Toys “R” Us liquidation, a tighter retail inventory and soft consumer demand have affected Mattel’s results in the past. In the first quarter of 2019, Mattel’s net revenues declined 3% year over year (on a constant-currency basis) due to a negative impact of the Toys ‘R’ Us liquidation. It also led to a sales slump across most brands under Mattel.
On the top-line front, lack of cutting-edge schemes for brand awareness and innovation is weighing on the company’s performance. Though overall POS has been mostly positive owing to Mattel’s efforts to lower retail inventories, the improvement is not broad based. We need to wait for more consistent progress across all its brands.
Moreover, Mattel’s operations in China have been a drag in recent times. China operations have excessive retail inventory, which is detrimental to Mattel’s profitability. Also, the company is struggling with managing inventory efficiently in China and reaching an optimal demand-supply balance. In the first quarter of 2019, Mattel’s net sales declined 3% owing to slowdown in China operations.
Regarding share price performance, it is imperative to mention that the stock has underperformed the industry in a year’s time. Shares of Mattel have lost 36.5% compared with the industry’s 31.7% decline.
These apart, Mattel suspended its quarterly dividend payout of 15 cents per share, beginning from the fourth quarter of 2017, to augment financial flexibility, fortify balance sheet and facilitate investments. The dividend suspension negatively impacted the company’s share-price performance.
Hasbro, Electronic Arts and Glu Mobile has a long-term earnings growth rate of 10.7%, 16.5% and 15%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
Mattel Turns Down MGA Entertainment Merger Deal, Stock Up
Shares of Mattel, Inc. (MAT - Free Report) jumped 5.3% yesterday, after the company rejected a merger offer from privately held MGA Entertainment. Notably, this was the second time that Mattel has rejected this offer.
Mattel said that the offer was “not in the best interests of Mattel and its shareholders.” MGA Entertainment CEO, Isaac Larian, renewed offer was based on the condition that following the merger he would become Mattel’s chairman and CEO. He also wanted all of Mattel’s current directors to step down “without any further compensation.”
Although Larian did not reveal the value of the offer, he stated that the proposed deal would be at premium of Mattel’s present market price. Furthermore, he added that Mattel’s problems have intensified since his first merger offer in April, 2018.
Persistent Challenges
Toys “R” Us liquidation, a tighter retail inventory and soft consumer demand have affected Mattel’s results in the past. In the first quarter of 2019, Mattel’s net revenues declined 3% year over year (on a constant-currency basis) due to a negative impact of the Toys ‘R’ Us liquidation. It also led to a sales slump across most brands under Mattel.
On the top-line front, lack of cutting-edge schemes for brand awareness and innovation is weighing on the company’s performance. Though overall POS has been mostly positive owing to Mattel’s efforts to lower retail inventories, the improvement is not broad based. We need to wait for more consistent progress across all its brands.
Moreover, Mattel’s operations in China have been a drag in recent times. China operations have excessive retail inventory, which is detrimental to Mattel’s profitability. Also, the company is struggling with managing inventory efficiently in China and reaching an optimal demand-supply balance. In the first quarter of 2019, Mattel’s net sales declined 3% owing to slowdown in China operations.
Regarding share price performance, it is imperative to mention that the stock has underperformed the industry in a year’s time. Shares of Mattel have lost 36.5% compared with the industry’s 31.7% decline.
These apart, Mattel suspended its quarterly dividend payout of 15 cents per share, beginning from the fourth quarter of 2017, to augment financial flexibility, fortify balance sheet and facilitate investments. The dividend suspension negatively impacted the company’s share-price performance.
Zacks Rank & Key Picks
Mattel has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include Hasbro, Inc. (HAS - Free Report) , Electronic Arts Inc. (EA - Free Report) and Glu Mobile Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hasbro, Electronic Arts and Glu Mobile has a long-term earnings growth rate of 10.7%, 16.5% and 15%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>