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JAKKS Pacific (JAKK) Q2 Earnings Lag Estimates, Revenues Beat

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JAKKS Pacific, Inc. (JAKK - Free Report) reported mixed second-quarter 2020 results, wherein the bottom line missed the Zacks Consensus Estimate but the top line surpassed the same. Notably, earnings missed the consensus mark for the third straight quarter.

The company reported adjusted loss of $4.38 per share, wider than the Zacks Consensus Estimate of a loss of $3.87. However, the figure was narrower the year-ago loss of $8.27 per share.

Revenues of $78.8 million beat the consensus mark of $70 million. However, the top line declined 17% year over year. The decline can primarily be attributed to store closure during the stay-at-home mandates both in the United States and Europe.

Net sales in the company’s Toys/Consumer Products segment decreased 4% year over year. Rise in sales of Boys’ and Girls’ toys was offset by declines in Seasonal products. Net sales of Toys/Consumer Products in North America declined 2% year over year. Moreover, outside of North America, net sales of Toys/Consumer Products were down 14%.

Net sales in the company’s Disguise (Halloween) segment were down 38% year over year owing to uncertainty among retailers regarding the impact that COVID-19 may have on Halloween merchandise sales.

JAKKS Pacific, Inc. Price, Consensus and EPS Surprise JAKKS Pacific, Inc. Price, Consensus and EPS Surprise

JAKKS Pacific, Inc. price-consensus-eps-surprise-chart | JAKKS Pacific, Inc. Quote

Operating Highlights

In the reported quarter, gross margin was 21.3%, up 270 basis points (bps) from the prior-year level. Margins benefited from lower product cost as a percent of sales. Adjusted EBITDA came in at a negative $4.6 million compared with a negative of $11.5 million reported in the prior-year quarter.

Balance Sheet

As of Jun 30, 2020, cash and cash equivalents were $52.7 million compared with $37 million as of Jun 30, 2019. Inventory decreased to $57.7 million from $54.3 million at 2019 end. Debt, non-current portion, net as of Jun 30 totaled $174.2 million, up from $175 million at the end of 2019.

Zacks Rank and Key Picks

JAKKS Pacific, which shares space with Hasbro, Inc. (HAS - Free Report) , has a Zacks Rank #4 (Sell).

Some better-ranked stocks, which warrant a look in the same space include Mattel, Inc. (MAT - Free Report) and Take-Two Interactive Software, Inc. (TTWO - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Mattel’s bottom line in 2020 is likely to witness growth of 50%.

Take-Two Interactive Software has an impressive long-term earnings growth rate of 10%.

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