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JAKKS Pacific (JAKK) Q1 Earnings & Revenues Miss Estimates

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JAKKS Pacific, Inc. (JAKK - Free Report) reported first-quarter 2020 financial numbers wherein both earnings and revenues missed the Zacks Consensus Estimate. The bottom line lagged the consensus mark in four of the trailing five quarters.

The company reported adjusted loss of 72 cents per share, wider than the Zacks Consensus Estimate of a loss of 64 cents. However, the figure narrowed from the year-ago loss of $1.0 per share.

Revenues of $66.6 million missed the consensus mark of $76 million. Moreover, the top line declined 6% year over year. Strong sales of Disney Frozen 2 products were overshadowed by decline in other lines.

The company announced that in the quarter it witnessed strong sales of products tied to Frozen 2, Sonic the Hedgehog and Nintendo, and the company’s own brands such as Fly Wheels, Kitten Catfe, Maui Wave Hoop, and Disguise Halloween costumes. However, gains were offset by dismal sales of older products. The company expects retail disruption to persist in the second half of the year due to the coronavirus pandemic.

Operating Highlights

In the reported quarter, gross margin was 24.6%, up 440 basis points (bps) from the prior-year level. Margins benefited from improved product margins as a percent of sales. Adjusted EBITDA came in at a negative $13.9 million compared with a negative of $17.1 million reported in the prior-year quarter.

JAKKS Pacific Inc Price, Consensus and EPS Surprise

Balance Sheet

As of Mar 31, 2020, cash and cash equivalents amounted to $44 million compared with $66.3 million as of Dec 31, 2019. Inventory decreased to $48.2 million from $54.3 million at 2019 end. Debt, non-current portion, net as of Mar 31 totaled $169.4 million, up from $175 million at the end of 2019.

Zacks Rank and Other Key Picks

JAKKS Pacific sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks, which warrant a space in the same space, include Activision Blizzard, Inc. (ATVI - Free Report) , Electronic Arts Inc. (EA - Free Report) and Glu Mobile Inc. (GLUU - Free Report) . All the stocks carry a Zacks Rank #2 (Buy).

Activision Blizzard, Electronic Arts and Glu Mobile have an impressive long-term earnings growth rate of 18.8%, 7.3% and 15%, respectively.

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