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Mattel (MAT) Down 0.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Mattel (MAT - Free Report) . Shares have lost about 0.2% 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’s Q3 Earnings & Revenue Beat Estimates
Mattel reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, the top and bottom lines increased on a year-over-year basis.
Negative investor sentiments were witnessed as the company cited a challenging macroeconomic environment. The company remains cautious of the high volatility impact on consumer demand, acting as a headwind for the upcoming holiday season.
Earnings & Revenue Discussion
In the quarter under review, the company reported adjusted earnings per share (EPS) of $1.08, beating the Zacks Consensus Estimate of 87 cents. In the year-ago quarter, MAT reported adjusted EPS of 82 cents.
Net sales during the quarter amounted to $1.92 billion, outpacing the Zacks Consensus Estimate of $1.8 billion. The top line increased 9% (on a reported basis) and 7% (on a constant-currency or cc basis), year over year. The upside was driven by pent-up consumer demand and solid Barbie movie-related toy line performance.
Net sales in the North America segment increased 10% year over year on a reported basis and at cc. The International segment’s net sales increased 10% (as reported) and 3% (at cc) year over year. Our model estimated North America and International revenues to increase 5.3% and 1.2% year over year, respectively. During the quarter, net Sales in the American Girl segment dropped 13% year over year on a reported basis and at cc.
In the North America segment, gross billings increased 10% (as reported and at cc) year over year.
Gross billings in the International segment increased 9% (on a reported basis) and 2% (at cc) year over year. The segment benefitted from the solid performances of Dolls (including Disney Princess and Disney Frozen, Monster High, and Barbie) and Vehicles (Hot Wheels). This was partially negated by the dismal performances of Action Figures, Building Sets, Games and Other (primarily Action Figures). Our model predicted North America and International gross billings to rise 5.5% and 1.6% year over year, respectively.
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 increased 9% (on a reported basis) and 6% (at cc) year over year to $ 2.1 billion. The Barbie brand witnessed a rise of 16% (on a reported basis) and 14% (at cc) year over year.
Gross billings at the Hot Wheels brand rose 22% (on a reported basis) and 19% (at cc) year over year. Gross billings at Fisher-Price were down 1% (on a reported basis) and 3% (at cc) year over year. Gross billings at Other increased 1% (on a reported basis) but declined 2% (at cc) year over year.
Operating Results
During the third quarter, the company’s adjusted gross margin came in at 51%, up 270 basis points year over year. The upside was attributed to benefits related to the Barbie movie, pricing, savings from the Optimizing for Growth program and cost deflation. However, unfavorable fixed cost absorption and supply chain costs partially offset this.
During the quarter under discussion, adjusted other selling and administrative expenses increased 8% year over year to $347.5 million. An increase in incentive compensation, salary and market-related pay drove the upside. This was partially offset by savings from the Optimizing for Growth program.
Balance Sheet
As of Sep 30, 2023, cash and cash equivalents were $455.7 million compared with $349 million as of Sep 30, 2022. Total inventories at the end of the third quarter came in at $790.5 million compared with $1,083.8 million reported in the prior-year quarter. Long-term debt (as of Sep 30, 2023) was $2,328.9 million compared with $2,324.5 million as of Sep 30, 2022. Shareholders’ equity was $2,035.5 million.
Outlook
For 2023, the company expects adjusted gross margin is expected to be in the range of 47-48% compared with the previous expectation of 47%. Adjusted EBITDA is projected at $925-$975 million compared with prior anticipation of $900-$950 million.
Capital expenditures are expected to be in the range of $175-$200 million compared with $187 million reported in 2022. MAT anticipates 2023 adjusted EPS to be between $1.15 and $1.25 compared with the prior expectation of $1.10 and $1.20. The Zacks Consensus Estimate for 2023 earnings is currently pegged at $1.22.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -33.91% due to these changes.
VGM Scores
At this time, Mattel has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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Mattel (MAT) Down 0.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Mattel (MAT - Free Report) . Shares have lost about 0.2% 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’s Q3 Earnings & Revenue Beat Estimates
Mattel reported third-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, the top and bottom lines increased on a year-over-year basis.
Negative investor sentiments were witnessed as the company cited a challenging macroeconomic environment. The company remains cautious of the high volatility impact on consumer demand, acting as a headwind for the upcoming holiday season.
Earnings & Revenue Discussion
In the quarter under review, the company reported adjusted earnings per share (EPS) of $1.08, beating the Zacks Consensus Estimate of 87 cents. In the year-ago quarter, MAT reported adjusted EPS of 82 cents.
Net sales during the quarter amounted to $1.92 billion, outpacing the Zacks Consensus Estimate of $1.8 billion. The top line increased 9% (on a reported basis) and 7% (on a constant-currency or cc basis), year over year. The upside was driven by pent-up consumer demand and solid Barbie movie-related toy line performance.
Net sales in the North America segment increased 10% year over year on a reported basis and at cc. The International segment’s net sales increased 10% (as reported) and 3% (at cc) year over year. Our model estimated North America and International revenues to increase 5.3% and 1.2% year over year, respectively. During the quarter, net Sales in the American Girl segment dropped 13% year over year on a reported basis and at cc.
In the North America segment, gross billings increased 10% (as reported and at cc) year over year.
Gross billings in the International segment increased 9% (on a reported basis) and 2% (at cc) year over year. The segment benefitted from the solid performances of Dolls (including Disney Princess and Disney Frozen, Monster High, and Barbie) and Vehicles (Hot Wheels). This was partially negated by the dismal performances of Action Figures, Building Sets, Games and Other (primarily Action Figures). Our model predicted North America and International gross billings to rise 5.5% and 1.6% year over year, respectively.
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 increased 9% (on a reported basis) and 6% (at cc) year over year to $ 2.1 billion. The Barbie brand witnessed a rise of 16% (on a reported basis) and 14% (at cc) year over year.
Gross billings at the Hot Wheels brand rose 22% (on a reported basis) and 19% (at cc) year over year. Gross billings at Fisher-Price were down 1% (on a reported basis) and 3% (at cc) year over year. Gross billings at Other increased 1% (on a reported basis) but declined 2% (at cc) year over year.
Operating Results
During the third quarter, the company’s adjusted gross margin came in at 51%, up 270 basis points year over year. The upside was attributed to benefits related to the Barbie movie, pricing, savings from the Optimizing for Growth program and cost deflation. However, unfavorable fixed cost absorption and supply chain costs partially offset this.
During the quarter under discussion, adjusted other selling and administrative expenses increased 8% year over year to $347.5 million. An increase in incentive compensation, salary and market-related pay drove the upside. This was partially offset by savings from the Optimizing for Growth program.
Balance Sheet
As of Sep 30, 2023, cash and cash equivalents were $455.7 million compared with $349 million as of Sep 30, 2022. Total inventories at the end of the third quarter came in at $790.5 million compared with $1,083.8 million reported in the prior-year quarter. Long-term debt (as of Sep 30, 2023) was $2,328.9 million compared with $2,324.5 million as of Sep 30, 2022. Shareholders’ equity was $2,035.5 million.
Outlook
For 2023, the company expects adjusted gross margin is expected to be in the range of 47-48% compared with the previous expectation of 47%. Adjusted EBITDA is projected at $925-$975 million compared with prior anticipation of $900-$950 million.
Capital expenditures are expected to be in the range of $175-$200 million compared with $187 million reported in 2022. MAT anticipates 2023 adjusted EPS to be between $1.15 and $1.25 compared with the prior expectation of $1.10 and $1.20. The Zacks Consensus Estimate for 2023 earnings is currently pegged at $1.22.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -33.91% due to these changes.
VGM Scores
At this time, Mattel has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Mattel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.