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JAKKS Pacific, Inc. (JAKK - Free Report) reported third-quarter 2020 results, wherein the top and the bottom line beat the Zacks Consensus Estimate. However, the metrics declined on a year-over-year basis.
Nonetheless, the company stated that it is making significant progress in terms of operating performance on the back of cost-saving initiatives and improved inventory management. Also, the company stated that it expects this trajectory to continue over the upcoming holiday season with new additions to the pipeline. Following the announcements, the company’s shares surged 31.4% during after-hour trading session on Nov 2.
Q3 Earnings and Revenues
The company reported adjusted earnings of $4.76 per share, surpassing the Zacks Consensus Estimate of $4.23. However, the metric declined 11.5% from prior-year earnings of $5.38 per share.
Revenues of $242.3 million beat the consensus mark of $231 million. However, the top line declined 13.5% year over year. This was primarily due to reduction in sales of products related to Disney’s Frozen and Frozen 2 as well as Disguise Halloween costumes.
Net sales at the company’s Toys/Consumer Products segment decreased 8% year over year. The decline was primarily attributed to lower sales of products related to Disney’s Frozen 2. Net sales of Toys/Consumer Products in North America declined 4% year over year. Moreover, in EMEA, Latin America and Asia markets, net sales of Toys/Consumer Products declined more than 20%.
Net sales at the company’s Disguise (Halloween) segment were down 27% year over year owing to uncertainty among retailers regarding the impact of COVID-19 on Halloween merchandise sales.
JAKKS Pacific, Inc. Price, Consensus and EPS Surprise
In the reported quarter, gross margin was 30.8%, up 190 basis points (bps) from the prior-year level. Margins benefited from effective cost control and improved inventory. Adjusted EBITDA came in at $42.7 million compared with $44.1 million reported in the prior-year quarter.
Balance Sheet
As of Sep 30, 2020, cash and cash equivalents (including restricted cash) were $79.8 million compared with $75.9 million as of Sep 30, 2019. Inventory during the third quarter totaled $54.6 million compared with $54.3 million at 2019-end. Debt, non-current portion, net as of Sep 30 totaled $151.4 million compared with $175 million at the end of 2019.
Some better-ranked stocks in the Consumer Discretionary sector are K12 Inc. (LRN - Free Report) , Mattel, Inc. (MAT - Free Report) and Activision Blizzard, Inc. . K12 sports a Zacks Rank #1, while Mattel and Activision Blizzard carry a Zacks Rank #2 (Buy).
K12 has a three-five-year earnings per share growth rate of 20%.
Mattel’s 2021 earnings are expected to surge 33.7%.
Activision Blizzard has a trailing four-quarter earnings surprise of 26.2%, on average.
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JAKKS Pacific (JAKK) Q3 Earnings Beat Estimates, Decline Y/Y
JAKKS Pacific, Inc. (JAKK - Free Report) reported third-quarter 2020 results, wherein the top and the bottom line beat the Zacks Consensus Estimate. However, the metrics declined on a year-over-year basis.
Nonetheless, the company stated that it is making significant progress in terms of operating performance on the back of cost-saving initiatives and improved inventory management. Also, the company stated that it expects this trajectory to continue over the upcoming holiday season with new additions to the pipeline. Following the announcements, the company’s shares surged 31.4% during after-hour trading session on Nov 2.
Q3 Earnings and Revenues
The company reported adjusted earnings of $4.76 per share, surpassing the Zacks Consensus Estimate of $4.23. However, the metric declined 11.5% from prior-year earnings of $5.38 per share.
Revenues of $242.3 million beat the consensus mark of $231 million. However, the top line declined 13.5% year over year. This was primarily due to reduction in sales of products related to Disney’s Frozen and Frozen 2 as well as Disguise Halloween costumes.
Net sales at the company’s Toys/Consumer Products segment decreased 8% year over year. The decline was primarily attributed to lower sales of products related to Disney’s Frozen 2. Net sales of Toys/Consumer Products in North America declined 4% year over year. Moreover, in EMEA, Latin America and Asia markets, net sales of Toys/Consumer Products declined more than 20%.
Net sales at the company’s Disguise (Halloween) segment were down 27% year over year owing to uncertainty among retailers regarding the impact of COVID-19 on Halloween merchandise sales.
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 30.8%, up 190 basis points (bps) from the prior-year level. Margins benefited from effective cost control and improved inventory. Adjusted EBITDA came in at $42.7 million compared with $44.1 million reported in the prior-year quarter.
Balance Sheet
As of Sep 30, 2020, cash and cash equivalents (including restricted cash) were $79.8 million compared with $75.9 million as of Sep 30, 2019. Inventory during the third quarter totaled $54.6 million compared with $54.3 million at 2019-end. Debt, non-current portion, net as of Sep 30 totaled $151.4 million compared with $175 million at the end of 2019.
Zacks Rank and Key Picks
JAKKS Pacific currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector are K12 Inc. (LRN - Free Report) , Mattel, Inc. (MAT - Free Report) and Activision Blizzard, Inc. . K12 sports a Zacks Rank #1, while Mattel and Activision Blizzard carry a Zacks Rank #2 (Buy).
K12 has a three-five-year earnings per share growth rate of 20%.
Mattel’s 2021 earnings are expected to surge 33.7%.
Activision Blizzard has a trailing four-quarter earnings surprise of 26.2%, on average.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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