The Zacks Toys - Games - Hobbies industry benefits from strong franchise and licensing partnerships, robust e-commerce and omnichannel sales, and consistent innovation in product categories. The robust demand for smart toys, STEM (science, technology, engineering and math) toys, sports toys, and fashion dolls and accessories bodes well. Industry participants have been focusing on the better execution of marketing and promotional initiatives to drive growth. Stocks like Hasbro, Inc. ((HAS Quick QuoteHAS - Free Report) ) and Mattel, Inc. ((MAT Quick QuoteMAT - Free Report) ) are likely to gain from these trends.

Industry Description

The Zacks Toys - Games - Hobbies industry comprises companies that design, manufacture and sell various games and toys. While traditional toymakers primarily focus on marketing and selling action figures, accessories, dolls, youth electronics, and arts and crafts, other industry players develop and market content and services on video game consoles, personal computers and mobiles. Some industry participants offer video game platforms, playing cards, Karuta and other products, as well as handheld and home console hardware systems and related software. Some companies develop and operate retail and online military simulation games, and offer both multi- and single-player games.

4 Trends Shaping the Future of Zacks Toys - Games - Hobbies Industry

U.S. Toy Industry Returns to Growth: After a sluggish 2023 and a muted 2024, the U.S. toy market is regaining momentum in 2025. Industry data from Circana indicate that sales increased 6% in the first half of the year, driven by a 3% rise in units sold and a 3% rally in the average selling price (ASP). This uptick in ASP is particularly notable, as prices had been stagnant for the past three years.

STEM Toys Gaining Popularity: The increasing demand for educational experiences outside traditional classrooms is a significant factor driving market growth. Parents are increasingly looking for toys that promote problem-solving, creativity and critical thinking in their children. STEM toys, in particular, are gaining popularity due to their ability to spark curiosity and develop practical skills, making them a top choice for many families. Factors such as heightened interest in coding and robotics toys have significantly shaped the market landscape. Industry players are capitalizing on new distribution methods, developing digital-play components, exploring ventures with other industries and focusing on international expansion to drive growth. The industry has enormous growth potential in China and Brazil.

Focus on Emerging Markets: Industry participants are focusing on expanding their presence in emerging markets in Eastern Europe, Asia, and Latin and South America. Emerging markets offer greater opportunities for revenue growth than developed markets.

High Costs Remain Concerning: Cost inflation hurt the industry due to rising raw material prices. Higher employee-related expenses are also hurting the industry. The firms have been resorting to product launches and shifting toward more technology-driven toys to boost sales, which may drive profits in the long haul. However, costs related to the initiatives may prove detrimental.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Toys – Games – Hobbies industry is grouped within the broader Zacks Consumer Discretionary Sector.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects.

The Zacks Toys – Games – Hobbies industry currently carries a Zacks Industry Rank #97, which places it in the top 40% of 245 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Before we present a few stocks that investors can take a look at, let us analyze the industry’s recent stock-market performance and valuation picture.

Industry Underperforms the S&P 500

The Zacks Toys – Games – Hobbies industry has underperformed the S&P 500 Index. The industry has rallied 7.6% over this period compared with the S&P 500’s rise of 20.5%. In the same time frame, the sector has grown 29.2%.

1-Year Price Performance

Industry's Current Valuation

Comparing the industry with the S&P 500 Index on the basis of forward 12-month price-to-earnings, which is a commonly used multiple for valuing the industry, we see that the industry is trading at 13.01X, lower than the S&P 500’s 22.89X and the sector’s 19.89X.

Over the last five years, the industry traded as high as 26.97X and as low as 11.17X, with the median being 14.14X, as the chart shows.

2 Zacks Toy Stocks to Keep an Eye On

Hasbro: The company is benefiting from the entertainment pipeline, strategic partnerships and product innovations. Also, the company's focus on high-margin segments, such as the Wizards, Licensing and Digital segments, bodes well. It delivered $98 million in gross savings in the first half and is on track to achieve its full-year target of $175-$225 million.

Shares of this Zacks Rank #1 (Strong Buy) company have gained 17.9% in the past year. The company’s 2025 earnings are likely to witness a year-over-year increase of 21.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price & Consensus: HAS

Mattel: The company is likely to benefit from the Optimizing for Profitable Growth program and strong demand for Hot Wheels. This, along with initiatives toward capturing the full value of its IPs and transforming itself into a high-performing toy company, bodes well. Mattel is capitalizing on partner-driven innovation to reinforce its competitive position and unlock incremental revenue streams.

Shares of this Zacks Rank #3 (Hold) company have declined 0.8% in the past year. The company’s 2025 earnings are pegged at $1.61, suggesting a year-over-year decline of 0.6%.

Price & Consensus: MAT