Why Is Mattel (MAT) Up 1.9% Since Last Earnings Report?
Mattel (MAT) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
It has been about a month since the last earnings report for Mattel (MAT). Shares have added about 1.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mattel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Mattel Q2 Earnings & Revenues Top Estimates, Rise Y/Y
Mattel reported second-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Notably, the metrics beat the consensus mark for the fifth consecutive quarter. Moreover, the top and the bottom line improved on a year-over-year basis.
Earnings & Revenues Discussion
During the second quarter, the company reported adjusted earnings per share (EPS) of 3 cents against the Zacks Consensus Estimate of a loss of 3 cents per share. In the prior-year quarter, the company had reported adjusted loss per share of 26 cents.
Net sales during the quarter came in at $1,026.4 million, surpassing the Zacks Consensus Estimate of $911 million by 12.7%. Moreover, the top line increased 40.2% year over year. On a constant-currency basis, sales increased 36% from the prior-year quarter’s levels.
In North America, gross billings rose 30% (as reported) and 29% (at constant currency) year over year. This can primarily be attributed to increase in sales in Vehicles (including Hot Wheels, CARS and Matchbox), Dolls (including Barbie, Spirit and Polly Pocket), Action Figures, Building Sets, Games and Other (including Jurassic World, Master of the Universe, WWE and MEGA) and Infant, Toddler and Preschool (including Fisher-Price and Thomas & Friends).
In the International region, gross billings rose 57% (as reported) and 47% (at constant currency) year over year. This was driven by growth in Dolls (including Barbie, Spirit and Polly Pocket), Vehicles (including Hot Wheels, Matchbox and CARS), Action Figures, Building Sets, Games, and Other (including Jurassic World, Masters of the Universe, MEGA and Games), and Infant, Toddler as well as Preschool (including Fisher-Price and Thomas & Friends).
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 Thomas & Friends and Other.
As reported, worldwide gross sales at Mattel Power Brands rose 41% year over year to $1,148.6 million. The metric also rose 37% year over year on a constant-currency (cc) basis. Moreover, the Barbie brand witnessed an improvement of 46% (on a reported basis) and 41% (at cc) year over year. Gross sales at the Hot Wheels brand surged 67% (on a reported basis) and 61% (at cc) year over year. Furthermore, gross sales at the Fisher-Price and Thomas & Friends brands were up 18% (on a reported basis) and 15% (at cc) year over year. Gross sales at Other increased 40% (on a reported basis) and 35% (at cc) year over year.
Adjusted gross margin expanded 370 basis points year over year to 47.5%, driven by fixed cost absorption benefit associated with high sales growth in the quarter and savings from the Optimizing for Growth program, partially offset by input cost inflation in cost of goods sold.
During the quarter, adjusted other selling and administrative expenses increased 16% year over year to $333 million. The increase was primarily driven by higher compensation expenses.
As of Jun 30, 2021, the company’s cash and equivalents were $384.7 million compared with $615.2 million as of Mar 31, 2021, and $762.2 million as on Dec 31, 2020. Total inventories as of the end of the second quarter were up 12.4% year over year to $818 million.
The company’s long-term debt was $2,839.1 million as of Jun 30, 2021, lower than $2,850.8 million as of Jun 30, 2020. Shareholder’s equity was $527.7 million.
Net sales growth for 2021 is estimated in the range of 12-14% at cc. For 2021, the company anticipates adjusted EBITDA in the range of $875-$900 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 8.7% due to these changes.
At this time, Mattel has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 looks promising. It comes with little surprise Mattel has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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