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JAKKS Pacific (JAKK) Stock Up on Q1 Earnings & Revenue Beat

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JAKKS Pacific, Inc. (JAKK - Free Report) reported first-quarter 2021 results, wherein the top and the bottom line beat the Zacks Consensus Estimate. The company’s net sales topped the Zacks Consensus Estimate for the fourth straight quarter while earnings topped estimates for the third consecutive quarter. Following the results, the company’s shares moved up 9.6% during after-hour trading session on Apr 29.

Nonetheless, the company stated that it is making significant progress in operating performance on the back of cost-saving initiatives and improved inventory management. The company also disclosed that it has delivered the best first-quarter operating results since 2015, with significant improvement in sales, gross margin, adjusted net income and adjusted EBITDA. Notably, the company drove double-digit sales increases in all of its toy divisions: Boys, Girls and Seasonal. Also, the company anticipates more people to return to the normal pattern of shopping, gift-giving and celebrating Halloween.

Q1 Earnings and Revenues

The company reported adjusted loss of $1.77 per share, narrower than the Zacks Consensus Estimate of a loss of $3.50. Also, the metric improved significantly from the prior-year loss of $7.23 per share.

Revenues of $83.8 million beat the consensus mark of $68 million. Moreover, the top line rose 25.8% year over year. This increase was primarily driven by higher sales of video games, including Nintendo, Sonic the Hedgehog and Apex: Legends, Disney Princess, solid initial sales of Raya and the Last Dragon, and continued sales strength in Black & Decker. The company also witnessed strong sales of its own brands like Perfectly Cute and Redo Skateboards.

Net sales at the company’s Toys/Consumer Products segment grew 28% globally on a year-over-year basis.

Net sales at the company’s Disguise (Halloween) remained flat year over year.

JAKKS Pacific, Inc. Price, Consensus and EPS Surprise

 

JAKKS Pacific, Inc. Price, Consensus and EPS Surprise

JAKKS Pacific, Inc. price-consensus-eps-surprise-chart | JAKKS Pacific, Inc. Quote

Operating Highlights

In the reported quarter, gross margin was 31.1%, up 650 basis points (bps) from the prior-year level. This marked the highest first-quarter gross margin percentage since 2017. Margins benefited from effective cost control and improved inventory management. Adjusted EBITDA was a loss of $2.4 million, improving considerably from the loss of $13.9 million reported in the prior-year quarter.

Balance Sheet

As of Mar 31, 2021, cash and cash equivalents (including restricted cash) were $84.1 million compared with $92.7 million as of Dec 31, 2020. Debt, non-current portion, net as of Mar 31, 2021, was $155 million compared with $150.4 million at the end of 2020.

Zacks Rank

JAKKS Pacific — which shares space with Activision Blizzard, Inc. , Electronic Arts Inc. (EA - Free Report) and Hasbro, Inc. (HAS - Free Report) in the Zacks  Toys - Games - Hobbies industry — currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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