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JAKKS Pacific Strategic Efforts Bode Well: Should You Hold?
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JAKKS Pacific, Inc. (JAKK - Free Report) is likely to benefit from strategic acquisitions, innovations and digitization. Also, its collaborations of popular brands and movie franchisees bode well. However, rise in interest expenses and high debt along with coronavirus-related woes, pose concerns.
Let’s delve deeper.
Growth Catalysts
JAKKS Pacific has emerged as a diversified consumer products company buoyed by a string of acquisitions over the past several years. Notably, its collaborations with Disney, Skechers, Nickelodeon, Cabbage Patch Kids and Chico to manufacture toys and merchandises is commendable. Also, new licensed properties, namely Aladdin, Godzilla, Toy Story 4 and Nintendo, have been performing well.
Recently, the company has introduced a number of mobile gaming apps and digital games, along with the physical toys, which would help the company cash in on the demand for smartphone gaming. It is also connecting with customers through digital videos, display banners and social ads, which would improve customer experience. Such investment in digital innovation will help in brand building and capitalizing on the lucrative technology-based gaming market.
The company also realizes the importance of online retailing and shifted considerable focus to aggressively boosting online sales. Over the past few quarters, JAKKS Pacific has focused on creating digital experiences for online shoppers such as videos, 360-degree product images and enhanced web pages. This modification in sales and logistics is likely to benefit the company in the upcoming periods.
Meanwhile, JAKKS Pacific continues to diversify its footprint outside the United States. Consistent with its endeavors, the company has opened sales offices and expanded distribution agreements for its products. Its partnership with Meisheng is expected to result in robust growth in Asia.
Concerns
The coronavirus outbreak has become a global crisis. Although the company cannot estimate the impact of the COVID-19 outbreak at this time, it is likely that the pandemic will have a material adverse effect on the company’s sales expectations for fiscal year 2020.
JAKKS Pacific has been grappling with higher interest expenses owing to the revolving credit facility. The company’s high debt remains a concern.
Moreover, the company’s battle against a broad array of alternative modes of entertainment, including video games, MP3 players, tablets, smartphones and other electronic devices, is .
The company’s shares have declined 46.6% so far this year against the industry’s 7.6% rally.
Earnings for Capcom and DouYu International are expected to surge 29.6% and 123.5%, respectively, in 2020.
K12 has a three-five year earnings per share growth rate of 15%.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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JAKKS Pacific Strategic Efforts Bode Well: Should You Hold?
JAKKS Pacific, Inc. (JAKK - Free Report) is likely to benefit from strategic acquisitions, innovations and digitization. Also, its collaborations of popular brands and movie franchisees bode well. However, rise in interest expenses and high debt along with coronavirus-related woes, pose concerns.
Let’s delve deeper.
Growth Catalysts
JAKKS Pacific has emerged as a diversified consumer products company buoyed by a string of acquisitions over the past several years. Notably, its collaborations with Disney, Skechers, Nickelodeon, Cabbage Patch Kids and Chico to manufacture toys and merchandises is commendable. Also, new licensed properties, namely Aladdin, Godzilla, Toy Story 4 and Nintendo, have been performing well.
Recently, the company has introduced a number of mobile gaming apps and digital games, along with the physical toys, which would help the company cash in on the demand for smartphone gaming. It is also connecting with customers through digital videos, display banners and social ads, which would improve customer experience. Such investment in digital innovation will help in brand building and capitalizing on the lucrative technology-based gaming market.
The company also realizes the importance of online retailing and shifted considerable focus to aggressively boosting online sales. Over the past few quarters, JAKKS Pacific has focused on creating digital experiences for online shoppers such as videos, 360-degree product images and enhanced web pages. This modification in sales and logistics is likely to benefit the company in the upcoming periods.
Meanwhile, JAKKS Pacific continues to diversify its footprint outside the United States. Consistent with its endeavors, the company has opened sales offices and expanded distribution agreements for its products. Its partnership with Meisheng is expected to result in robust growth in Asia.
Concerns
The coronavirus outbreak has become a global crisis. Although the company cannot estimate the impact of the COVID-19 outbreak at this time, it is likely that the pandemic will have a material adverse effect on the company’s sales expectations for fiscal year 2020.
JAKKS Pacific has been grappling with higher interest expenses owing to the revolving credit facility. The company’s high debt remains a concern.
Moreover, the company’s battle against a broad array of alternative modes of entertainment, including video games, MP3 players, tablets, smartphones and other electronic devices, is .
The company’s shares have declined 46.6% so far this year against the industry’s 7.6% rally.
Zacks Rank & Key Pick
JAKKS Pacific has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector include Capcom Co., Ltd. (CCOEY - Free Report) , K12 Inc (LRN - Free Report) and DouYu International Holdings Limited (DOYU - Free Report) , each sporting a Zacks Rank #1.
Earnings for Capcom and DouYu International are expected to surge 29.6% and 123.5%, respectively, in 2020.
K12 has a three-five year earnings per share growth rate of 15%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>