We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Mattel (MAT) Rides on Robust Demand for Barbie & Hot Wheels
Read MoreHide Full Article
Mattel, Inc. (MAT - Free Report) is benefiting from the solid performance of its Barbie brand and Hot Wheels. The company has been gaining from licensing agreements. Consequently, the company's shares have gained 12% in the past year against the industry's decline of 15.2%. However, the rise in material and logistic expenses remains a headwind. Let's delve deeper.
Growth Drivers
Barbie brand continues to instill investor confidence with solid performance. In the first quarter, the Barbie brand's worldwide gross billings witnessed an improvement of 8% on a reported basis and 12% at cc. Per NPD, Barbie strengthened its position as the number one Global Doll brand in 2021 for the second consecutive year. Going forward, the brand has new fashion segments like Barbie EXTRA and Ken Turned 60 in its pipeline. Meanwhile, the company plans to develop Barbie Fashion Battle, a reality show where designers will compete for the chance to create a fashion collection for Barbie. During the second quarter of 2021, the company gave a green signal to the new Barbie feature film and announced the commencement of production in 2022 with a targeted release in 2023.
Hot Wheels continues to be a major growth driver. In fact, in 2018, worldwide gross sales for Hot Wheels were up 9% and reached the highest annual sales in its 50-year history. In 2020, worldwide gross sales at the Hot Wheels brand increased 3% on a reported basis and 5% at constant currency. It marked the seventh consecutive year of POS growth in the United States and globally. The company witnessed strong Hot Wheels sales in 2021. During first-quarter 2022, gross billings at the Hot Wheels brand surged 31% (on a reported basis) and 36% (at cc) year over year. The company has been witnessing an improving sales trend for Hot Wheels and is quite confident about the brand's long-term prospects. The company announced that J.J. Abrams' Bad Robot will produce the Hot Wheels movie.
The Zacks Rank #3 (Hold) company continues to make progress toward capturing the full value of its IP and transforming itself into a high-performing toy company. To this end, the company is leveraging its resources to relaunch its catalog IP, including Masters of the Universe, Matchbox and Monster High. The company is optimistic in this regard, owing to its upside potential and built-in fan base. It has been strengthening its partnership with major entertainment companies, including Disney, Microsoft, Nickelodeon, Nintendo, Universal, Warner Bros and WWE.
In January 2022, the company entered into a multi-year global licensing agreement with Disney to develop and market the latter's Princess and Frozen branded line of products. The deal marks the reunion of Disney characters with Mattel after a gap of nearly seven years. Built upon its existing licensing arrangement with Disney for Pixar Animation Studio's Toy Story and Cars franchises as well as Lightyear, the company anticipates launching the new products starting in 2023. Per the agreement, Mattel will develop toy lines for Disney Consumer Products, Games and Publishing, including fashion dolls, small dolls and figures.
Image Source: Zacks Investment Research
Concerns
During the first quarter, cost inflation had a negative impact on the company's operations due to a rise in raw materials. During first-quarter 2022, adjusted gross margin contracted 70 basis points year over year to 46.6% due to input cost inflation. However, the decline was offset by benefits associated with pricing, favorable fixed cost absorption and savings from the Optimizing for Growth program. During the quarter under discussion, adjusted other selling and administrative expenses increased by $13 million year over year to $322 million. The increase can primarily be attributed to higher employee-related expenses.
Maintaining liquidity during the pandemic has become an arduous task for most companies. The company's long-term debt was $2,322.1 million as of Mar 31, 2022, lower than $2,570 million as of Dec 31, 2021. As of Mar 31, 2022, the company's cash and equivalents were $536.6 million compared with $615.2 million as of Dec 31, 2021. The company's cash and cash equivalent might not be enough for the company to manage its debt level.
Key Picks
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Bluegreen Vacations Holding Corporation , Caleres, Inc. (CAL - Free Report) and MGM Resorts International (MGM - Free Report) .
Bluegreen Vacations sports a Zacks Rank #1 (Strong Buy). BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has surged 48.1% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BVH's current financial year sales and earnings per share (EPS) indicates growth of 11.2% and 35.1%, respectively, from the year-ago period's reported levels.
Caleres flaunts a Zacks Rank #1. CAL has a trailing four-quarter earnings surprise of 62.9%, on average. Shares of the company have gained 0.8% in the past year.
The Zacks Consensus Estimate for CAL's current financial year sales and EPS suggests growth of 4.8% and 0.7%, respectively, from the year-ago period's levels.
MGM Resorts carries a Zacks Rank #1. MGM has a trailing four-quarter earnings surprise of 212.5%, on average. Shares of the company have declined 30.5% in the past year.
The Zacks Consensus Estimate for MGM's current financial year sales and EPS suggests growth of 28.1% and 240.3%, respectively, from the year-ago period's reported levels.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Mattel (MAT) Rides on Robust Demand for Barbie & Hot Wheels
Mattel, Inc. (MAT - Free Report) is benefiting from the solid performance of its Barbie brand and Hot Wheels. The company has been gaining from licensing agreements. Consequently, the company's shares have gained 12% in the past year against the industry's decline of 15.2%. However, the rise in material and logistic expenses remains a headwind. Let's delve deeper.
Growth Drivers
Barbie brand continues to instill investor confidence with solid performance. In the first quarter, the Barbie brand's worldwide gross billings witnessed an improvement of 8% on a reported basis and 12% at cc. Per NPD, Barbie strengthened its position as the number one Global Doll brand in 2021 for the second consecutive year. Going forward, the brand has new fashion segments like Barbie EXTRA and Ken Turned 60 in its pipeline. Meanwhile, the company plans to develop Barbie Fashion Battle, a reality show where designers will compete for the chance to create a fashion collection for Barbie. During the second quarter of 2021, the company gave a green signal to the new Barbie feature film and announced the commencement of production in 2022 with a targeted release in 2023.
Hot Wheels continues to be a major growth driver. In fact, in 2018, worldwide gross sales for Hot Wheels were up 9% and reached the highest annual sales in its 50-year history. In 2020, worldwide gross sales at the Hot Wheels brand increased 3% on a reported basis and 5% at constant currency. It marked the seventh consecutive year of POS growth in the United States and globally. The company witnessed strong Hot Wheels sales in 2021. During first-quarter 2022, gross billings at the Hot Wheels brand surged 31% (on a reported basis) and 36% (at cc) year over year. The company has been witnessing an improving sales trend for Hot Wheels and is quite confident about the brand's long-term prospects. The company announced that J.J. Abrams' Bad Robot will produce the Hot Wheels movie.
The Zacks Rank #3 (Hold) company continues to make progress toward capturing the full value of its IP and transforming itself into a high-performing toy company. To this end, the company is leveraging its resources to relaunch its catalog IP, including Masters of the Universe, Matchbox and Monster High. The company is optimistic in this regard, owing to its upside potential and built-in fan base. It has been strengthening its partnership with major entertainment companies, including Disney, Microsoft, Nickelodeon, Nintendo, Universal, Warner Bros and WWE.
In January 2022, the company entered into a multi-year global licensing agreement with Disney to develop and market the latter's Princess and Frozen branded line of products. The deal marks the reunion of Disney characters with Mattel after a gap of nearly seven years. Built upon its existing licensing arrangement with Disney for Pixar Animation Studio's Toy Story and Cars franchises as well as Lightyear, the company anticipates launching the new products starting in 2023. Per the agreement, Mattel will develop toy lines for Disney Consumer Products, Games and Publishing, including fashion dolls, small dolls and figures.
Image Source: Zacks Investment Research
Concerns
During the first quarter, cost inflation had a negative impact on the company's operations due to a rise in raw materials. During first-quarter 2022, adjusted gross margin contracted 70 basis points year over year to 46.6% due to input cost inflation. However, the decline was offset by benefits associated with pricing, favorable fixed cost absorption and savings from the Optimizing for Growth program. During the quarter under discussion, adjusted other selling and administrative expenses increased by $13 million year over year to $322 million. The increase can primarily be attributed to higher employee-related expenses.
Maintaining liquidity during the pandemic has become an arduous task for most companies. The company's long-term debt was $2,322.1 million as of Mar 31, 2022, lower than $2,570 million as of Dec 31, 2021. As of Mar 31, 2022, the company's cash and equivalents were $536.6 million compared with $615.2 million as of Dec 31, 2021. The company's cash and cash equivalent might not be enough for the company to manage its debt level.
Key Picks
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Bluegreen Vacations Holding Corporation , Caleres, Inc. (CAL - Free Report) and MGM Resorts International (MGM - Free Report) .
Bluegreen Vacations sports a Zacks Rank #1 (Strong Buy). BVH has a trailing four-quarter earnings surprise of 85.9%, on average. The stock has surged 48.1% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BVH's current financial year sales and earnings per share (EPS) indicates growth of 11.2% and 35.1%, respectively, from the year-ago period's reported levels.
Caleres flaunts a Zacks Rank #1. CAL has a trailing four-quarter earnings surprise of 62.9%, on average. Shares of the company have gained 0.8% in the past year.
The Zacks Consensus Estimate for CAL's current financial year sales and EPS suggests growth of 4.8% and 0.7%, respectively, from the year-ago period's levels.
MGM Resorts carries a Zacks Rank #1. MGM has a trailing four-quarter earnings surprise of 212.5%, on average. Shares of the company have declined 30.5% in the past year.
The Zacks Consensus Estimate for MGM's current financial year sales and EPS suggests growth of 28.1% and 240.3%, respectively, from the year-ago period's reported levels.