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Bull of the Day: Mattel (MAT)

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Mattel Inc. (MAT - Free Report) is one of the most well-known maker and manufacturer of toys around the world. Its brand portfolio includes Barbie, Hot Wheels, Fisher-Price, Thomas & Friends, and American Girl, among many others.

Q3 Earnings Recap

Shares of Mattel soared 9.5%, the most in five months, on Friday after the toy maker reported third-quarter earnings that trounced analyst expectations.

Both the top and bottom line beat our consensus estimate. Adjusted earnings nearly tripled year-over-year to $0.95, and revenue grew 10% to $1.63 billion.

Barbie sales were a big winner in Q3, surging 28% to roughly $532 million worldwide, while Hot Wheels sales jumped 6.6% to $312.8 million.

In order to boost both net income and earnings growth, the company said it’s focusing on margin expansion and cost savings in the final months of the year; Mattel also said it remains “focused on creating long-term shareholder value.”

"The toy industry, as a whole, grew significantly and continues to demonstrate its resilience in challenging economic times. Mattel’s growth outpaced the industry as we gained share in key markets around the world and achieved growth in each of our four regions,” said CEO Ynon Kreiz.

MAT Breaks Out

Mattel, Inc. Price and Consensus


Since March 23, shares of Mattel have climbed over 97%. Estimates have been rising too, and MAT is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, two analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from a loss of $0.15 to a loss of $0.12 per share. Earnings are expected to grow 60% year-over-year, and in 2021, Mattel’s bottom line could see triple-digit earnings growth.

These estimate figures could change in the next few trading days as covering analysts take into account the company’s most recent quarterly performance.

Beyond the near-term setback that is Covid-19, Mattel is facing one of its biggest challenges head on: the rise of digital games. It’s currently partnering with NetEase (NTES - Free Report) , a Chinese game developer, to develop a Hot Wheels mobile game.

And, the stock could potentially have significant upside from its current levels, especially as management doubles down on expanding point-of-sales trends, gross margin, and other growth initiatives.

If you’re an investor searching for a consumer discretionary stock to add to your portfolio, make sure to keep MAT on your shortlist.

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