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Can Mattel (MAT) Pull a Surprise this Earnings Season?
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Mattel, Inc. (MAT - Free Report) is slated to release second-quarter 2016 financial numbers on Jul 20, after market close.
In the last reported quarter, the company’s loss was wider than the Zacks Consensus Estimate, which led to a negative earnings surprise of 62.50%. Moreover, the trailing four-quarter average earnings surprise stands at a negative 13.09%.
Let’s see how things are shaping up for this announcement.
Mattel’s increased focus on improving its point of sale through launch of new products coupled with strategic initiatives like entering new categories and strengthening the Girls portfolio should boost results in the to-be-reported quarter.
Notably, the company expects gross sales to be more or less flat, sequentially, on a constant currency basis in the second quarter.
Mattel’s core brands like Fisher-Price, Hot Wheels, Mega Bloks and RoseArt have been doing well and we anticipate this trend to continue in the second quarter. Meanwhile, launch of Game Developer Barbie should help the company revamp its Barbie brand. Moreover, efforts to achieve cumulative cost savings and enhanced margins should further boost the quarter’s performance.
However, challenging macroeconomic environment and sluggish performance at Mattel Girls & Boys Brands and American Girl Brands segments might keep revenues under pressure in the second quarter.
Though the dollar weakened slightly in 2016 compared to the previous year, the negative currency impact is still likely to hamper profitability in the to-be-reported quarter. Also, despite the cost-saving measures, margins in the quarter could remain under pressure due to costs related to marketing and promotional initiatives.
Earnings Whispers
Our proven model does not conclusively show that Mattel is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Mattel’s earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 6 cents.
Zacks Rank: Mattel carries a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
Note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Intrawest Resorts Holdings, Inc. (SNOW - Free Report) has an earnings ESP of +1.44% and a Zacks Rank #1.
Vail Resorts Inc. (MTN - Free Report) has an earnings ESP of +1.21% and a Zacks Rank #2.
Red Lion Hotels Corporation has an earnings ESP of +100.00% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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Can Mattel (MAT) Pull a Surprise this Earnings Season?
Mattel, Inc. (MAT - Free Report) is slated to release second-quarter 2016 financial numbers on Jul 20, after market close.
In the last reported quarter, the company’s loss was wider than the Zacks Consensus Estimate, which led to a negative earnings surprise of 62.50%. Moreover, the trailing four-quarter average earnings surprise stands at a negative 13.09%.
Let’s see how things are shaping up for this announcement.
MATTEL INC Price and EPS Surprise
MATTEL INC Price and EPS Surprise | MATTEL INC Quote
Factors at Play
Mattel’s increased focus on improving its point of sale through launch of new products coupled with strategic initiatives like entering new categories and strengthening the Girls portfolio should boost results in the to-be-reported quarter.
Notably, the company expects gross sales to be more or less flat, sequentially, on a constant currency basis in the second quarter.
Mattel’s core brands like Fisher-Price, Hot Wheels, Mega Bloks and RoseArt have been doing well and we anticipate this trend to continue in the second quarter. Meanwhile, launch of Game Developer Barbie should help the company revamp its Barbie brand. Moreover, efforts to achieve cumulative cost savings and enhanced margins should further boost the quarter’s performance.
However, challenging macroeconomic environment and sluggish performance at Mattel Girls & Boys Brands and American Girl Brands segments might keep revenues under pressure in the second quarter.
Though the dollar weakened slightly in 2016 compared to the previous year, the negative currency impact is still likely to hamper profitability in the to-be-reported quarter. Also, despite the cost-saving measures, margins in the quarter could remain under pressure due to costs related to marketing and promotional initiatives.
Earnings Whispers
Our proven model does not conclusively show that Mattel is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Mattel’s earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 6 cents.
Zacks Rank: Mattel carries a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
Note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Intrawest Resorts Holdings, Inc. (SNOW - Free Report) has an earnings ESP of +1.44% and a Zacks Rank #1.
Vail Resorts Inc. (MTN - Free Report) has an earnings ESP of +1.21% and a Zacks Rank #2.
Red Lion Hotels Corporation has an earnings ESP of +100.00% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>