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Jakks (JAKK) Down 4.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Jakks Pacific (JAKK - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Jakks due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

JAKKS Pacific Q2 Earnings & Revenue Beat Estimates

JAKKS Pacific, Inc. reported strong second-quarter 2021 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While the company’s net sales topped the Zacks Consensus Estimate for the fifth straight quarter, earnings surpassed the consensus mark for the fourth consecutive quarter.

Q2 Earnings and Revenues

The company reported adjusted loss of 38 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.66. The reported figure improved significantly from the prior-year loss of $4.38 per share.

Revenues of $112.4 million beat the consensus mark of $92 million. The top line surged 43% on a year-over-year basis. This increase was primarily driven by higher sales of video games, including Nintendo, Sonic the Hedgehog, Disney Princess, and continued sales strength in Black & Decker. The company also witnessed strong sales of its own brands like Perfectly Cute and Redo Skateboard.

Net sales at the company’s Toys/Consumer Products segment grew 45% globally on a year-over-year basis, while sales of Disguise costumes increased 37% year over year.

Operating Highlights

In the reported quarter, gross margin was 28.4%, up 710 basis points (bps) from the prior-year level. This marked the highest first-quarter gross margin percentage since 2016. Margins benefited from effective cost control and improved inventory management. Adjusted EBITDA was $5 million, improving considerably from a loss of $4.6 million reported in the prior-year quarter.

Balance Sheet

As of Jun 30, 2021, cash and cash equivalents (including restricted cash) were $38.3 million compared with $52.7 million as of Jun 30, 2020. Debt, non-current portion, net as of Jun 30, 2021, was $95.7 million compared with $174.2 million at the end of Jun 30, 2020.


 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -12.28% due to these changes.

VGM Scores

Currently, Jakks has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Jakks has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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