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Mattel (MAT) Down 6.8% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Mattel (MAT - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Mattel 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.

Mattel Q1 Earnings Beat, Revenues Miss

Mattel reported first-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The top line missed the consensus estimate for the second straight quarter.  

The company experienced robust bottom-line performance, largely propelled by increased margins and the repurchase of $100 million worth of shares during the quarter, and remained aligned with its annual targets. It anticipates ongoing advantages from the Optimizing for Profitable Growth initiative, aiming for $60 million in cost reductions in 2024 and a cumulative $200 million by 2026.

Earnings & Revenue Discussion

In the quarter under review, Mattel reported adjusted loss per share of 5 cents, narrower than the Zacks Consensus Estimate of a loss of 12 cents. In the prior-year quarter, it reported adjusted loss per share of 24 cents.

Net sales during the quarter amounted to $809.5 million, missing the consensus estimate of $838 million by 3.4%. The top line decreased 1% on a reported basis and at constant currency or cc year over year.

Net sales in the North America segment increased 2% year over year on a reported basis and at cc. The International segment’s net sales decreased 4% (as reported) and declined 5% (at cc) year over year.

In the North America segment, gross billings increased 1% (as reported and at cc) year over year.

Gross billings in the International segment decreased 4% (on a reported basis) and 6% (at cc) year over year. The decline was primarily due to a decrease in Dolls (mainly Disney Princess and Disney Frozen), Infant, Toddler and Preschool (primarily Fisher-Price and Preschool Entertainment), Action Figures, Building Sets, Games and Other (mostly Action Figures). The decline was partly overshadowed by growth in Vehicles (primarily Hot Wheels).

Brand-Wise Worldwide Sales

Mattel, through its subsidiaries, sells a broad range of toys. These items are grouped under different brands, Barbie, Hot Wheels, Fisher-Price and Other.

Worldwide gross billings by Mattel Power Brands decreased 1% (on a reported basis) and 2% (at cc) year over year to $898.9 million. The Barbie brand’s gross billing was flat year over year.

Gross billings at the Hot Wheels brand rose 5% (on a reported basis) and 4% (at cc) year over year. Gross billings at Fisher-Price were flat (on a reported basis), but down 1% (at cc) year over year. Gross billings at Other decreased 7% (on a reported basis) and 7% (at cc) year over year.

Operating Results

During the first quarter of 2024, Mattel’s adjusted gross margin was 48.3%, up 830 basis points year over year. The upside was attributed to a decline in inventory management costs, cost deflation, savings from the Optimizing for Profitable Growth program, favorable mix and foreign exchange as well as lower other supply-chain costs.

During the quarter under discussion, adjusted other selling and administrative expenses increased $6 million year over year to $408.8 million. The increase was mainly caused by market-related pay increases as well as investments, marginally overshadowed by cost savings.

Balance Sheet

As of Mar 31, 2024, cash and cash equivalents were $1.13 billion compared with $461.7 million as of 2023 end. Total inventories at the end of the first quarter were $669.3 million compared with $961 million in the year-ago quarter.

Long-term debt (as of Mar 31, 2024) was $2.33 billion, on par with the reported value in 2023 end. Shareholders’ equity was $2.05 billion as of Mar 31, 2024.

2024 Outlook

For 2024, management continues to expect net sales to be comparable with the prior year on a constant-currency basis.

Mattel continues to expect adjusted gross margin in the range of 48.5-49%. Adjusted EBITDA is projected in the range of $975-$1,025 million.

Capital expenditures are expected in the range of $175-$200 million compared with $160 million in 2023. Mattel anticipates 2024 adjusted EPS to be between $1.35 and $1.45, compared with $1.23 in the prior-year quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Mattel has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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.


Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Mattel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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