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Bear of the Day: Mattel (MAT)

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Headquartered in El Segundo, CA, Mattel (MAT - Free Report) is one of the world’s largest manufacturer of toys. Their portfolio includes Barbie, Hot Wheels, Monster High, American Girl, Thomas & Friends and Fisher-Price brands. They employ approximately 30,000 people in 40 countries and sell products in more than 150 countries.

Weak Results Lead to Falling Estimates

Mattel’s adjusted loss of $0.32 per share was much worse than the Zacks Consensus Estimate of a loss of $0.17. Revenues fell 15% year over year to $735.6 million, also significantly short of our estimate of $810.2 million.

"Our Q1 results were below our expectations due to the retail inventory overhang coming out of the holiday period,” said the CEO. Shares fell more than 5% in the after-hours trading and are down more than 20% year-to-date.

Estimates have also plunged after the report. Zacks Consensus Estimates for the current and the next year have fallen to $1.16 per share and $1.48 per share from $1.42 and $ 1.69 respectively before the results. The company has missed in three out of last four quarters, with an average negative quarterly surprise exceeding 12%.

 

Mattel, Inc. Price and Consensus

Mattel, Inc. Price and Consensus | Mattel, Inc. Quote

 

The Bottom Line

Mattel has seen weak sales for the past many quarters as they struggle with kids’ rising preference for videogames and smartphone applications. Additionally, they are losing in competition with Hasbro after Disney selected Hasbro for the Disney Princess and Frozen franchises. Mattel had previously held the license for those dolls.

Per WSJ, Hasbro recently surpassed Mattel in quarterly revenues for the first time since 2000. Hasbro (HAS) currently has a Zacks Rank #2 (Buy).

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