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MAT Stock Outruns Industry in Past Three Months: Should You Buy Now?
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Shares of Mattel, Inc. (MAT - Free Report) have gained 16.1% in the past three months, outperforming the industry’s 3.6% growth. The initiative toward capturing the full value of its IPs and transforming itself into a high-performing toy company has caught the attention of investors.
Major Growth Drivers for MAT Stock
Dominance in Key Product Lines: Mattel continues to maintain its leadership position in core categories like dolls, vehicles and preschool products. Brands like Barbie, Hot Wheels and Fisher-Price remain unrivaled, with Mattel gaining global market share in the second quarter of 2024. The success of these brands, particularly Barbie following the release of the highly successful movie, has cemented Mattel’s cultural relevance and commercial appeal. During the second quarter, revenues from vehicles grew by 2% year over year, led by a 5% increase in Hot Wheels sales, while the Fisher-Price power brand saw 11% growth, demonstrating the strength of Mattel's portfolio across various demographics and regions.
Entertainment Expansion: Mattel is leveraging its intellectual property (IP) beyond toys, with meaningful progress across multiple entertainment verticals. Following the success of the "Barbie" movie, Mattel announced significant future projects, including a Masters of the Universe film with Amazon MGM Studios, Monster High co-developed with Universal Pictures and an animated Barney series set to debut on Max and Cartoon Network.
Image Source: Zacks Investment Research
The company's plans to expand into digital gaming, with a multi-year licensing agreement with Outright Games and potential for self-publishing, create new revenue streams with minimal investment. This diversification into film, TV and gaming provides Mattel with new opportunities to capitalize on its iconic brands and reinforces its long-term growth prospects.
Improved Profitability and Cash Flow: One of Mattel's standout achievements is its improvement in profitability. During the second quarter, adjusted EBITDA rose by $23 million year over year to $171 million and adjusted earnings per share (EPS) nearly doubled, increasing from 10 cents in the prior year to 19 cents. Mattel more than doubled its free cash flow in the trailing 12-month period, from $361 million to $826 million.
With cash flow being a key metric for investors, Mattel’s ability to generate higher cash reserves provides the company flexibility in reinvesting, share repurchases and navigating economic uncertainty. In the first half of 2024, Mattel repurchased $200 million worth of shares, signaling confidence in its long-term value and creating an added benefit for shareholders.
Strong Future Outlook: Despite a challenging first half for the toy industry, Mattel's outlook for the remainder of the year is optimistic. The company is reiterating its full-year guidance and expects new product innovations, increased retail support and robust marketing efforts to drive growth during the holiday season. Mattel's strategic focus on profitability, cash generation and gross margin expansion should continue to benefit shareholders in the near and long term. Additionally, Mattel's investment in key growth areas — such as the 65th-anniversary celebration of Barbie, new product launches and content creation — positions it for growth.
The Bottom Line: Should You Buy MAT Stock Now?
Mattel has demonstrated strong performance, driven by the success of its iconic brands, expansion into entertainment and improvements in profitability and cash flow. With a robust pipeline of new projects and strategic initiatives, including digital gaming and content creation, Mattel is well-positioned for sustained growth. Moreover, MAT stock is currently trading at a discount, with a forward 12-month price-to-earnings ratio of 12.7x, significantly below the industry average of 23.84x, presenting a potential value-buy opportunity. For investors looking to ride the wave of a high-performing, innovative company at a bargain price, now could be the perfect time to buy into Mattel’s momentum.
Norwegian Cruise Line has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has rallied 38.1% in the past year. The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS calls for growth of 9.8% and 125.7%, respectively, from the year-ago levels.
DoubleDown Interactive has a trailing four-quarter earnings surprise of 26%, on average. The stock has surged 56.5% in the past year. The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Carnival has a trailing four-quarter earnings surprise of 320.4%, on average. The stock has increased 36.5% in the past year. The Zacks Consensus Estimate for CCL’s 2025 sales and EPS indicates an increase of 4.7% and 28.8%, respectively, from the year-ago levels.
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MAT Stock Outruns Industry in Past Three Months: Should You Buy Now?
Shares of Mattel, Inc. (MAT - Free Report) have gained 16.1% in the past three months, outperforming the industry’s 3.6% growth. The initiative toward capturing the full value of its IPs and transforming itself into a high-performing toy company has caught the attention of investors.
Major Growth Drivers for MAT Stock
Dominance in Key Product Lines: Mattel continues to maintain its leadership position in core categories like dolls, vehicles and preschool products. Brands like Barbie, Hot Wheels and Fisher-Price remain unrivaled, with Mattel gaining global market share in the second quarter of 2024. The success of these brands, particularly Barbie following the release of the highly successful movie, has cemented Mattel’s cultural relevance and commercial appeal. During the second quarter, revenues from vehicles grew by 2% year over year, led by a 5% increase in Hot Wheels sales, while the Fisher-Price power brand saw 11% growth, demonstrating the strength of Mattel's portfolio across various demographics and regions.
Entertainment Expansion: Mattel is leveraging its intellectual property (IP) beyond toys, with meaningful progress across multiple entertainment verticals. Following the success of the "Barbie" movie, Mattel announced significant future projects, including a Masters of the Universe film with Amazon MGM Studios, Monster High co-developed with Universal Pictures and an animated Barney series set to debut on Max and Cartoon Network.
Image Source: Zacks Investment Research
The company's plans to expand into digital gaming, with a multi-year licensing agreement with Outright Games and potential for self-publishing, create new revenue streams with minimal investment. This diversification into film, TV and gaming provides Mattel with new opportunities to capitalize on its iconic brands and reinforces its long-term growth prospects.
Improved Profitability and Cash Flow: One of Mattel's standout achievements is its improvement in profitability. During the second quarter, adjusted EBITDA rose by $23 million year over year to $171 million and adjusted earnings per share (EPS) nearly doubled, increasing from 10 cents in the prior year to 19 cents. Mattel more than doubled its free cash flow in the trailing 12-month period, from $361 million to $826 million.
With cash flow being a key metric for investors, Mattel’s ability to generate higher cash reserves provides the company flexibility in reinvesting, share repurchases and navigating economic uncertainty. In the first half of 2024, Mattel repurchased $200 million worth of shares, signaling confidence in its long-term value and creating an added benefit for shareholders.
Strong Future Outlook: Despite a challenging first half for the toy industry, Mattel's outlook for the remainder of the year is optimistic. The company is reiterating its full-year guidance and expects new product innovations, increased retail support and robust marketing efforts to drive growth during the holiday season. Mattel's strategic focus on profitability, cash generation and gross margin expansion should continue to benefit shareholders in the near and long term. Additionally, Mattel's investment in key growth areas — such as the 65th-anniversary celebration of Barbie, new product launches and content creation — positions it for growth.
The Bottom Line: Should You Buy MAT Stock Now?
Mattel has demonstrated strong performance, driven by the success of its iconic brands, expansion into entertainment and improvements in profitability and cash flow. With a robust pipeline of new projects and strategic initiatives, including digital gaming and content creation, Mattel is well-positioned for sustained growth. Moreover, MAT stock is currently trading at a discount, with a forward 12-month price-to-earnings ratio of 12.7x, significantly below the industry average of 23.84x, presenting a potential value-buy opportunity. For investors looking to ride the wave of a high-performing, innovative company at a bargain price, now could be the perfect time to buy into Mattel’s momentum.
MAT’s Zacks Rank & Other Key Picks
MAT currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) , DoubleDown Interactive Co., Ltd. (DDI - Free Report) and Carnival Corporation & plc (CCL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Norwegian Cruise Line has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has rallied 38.1% in the past year. The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS calls for growth of 9.8% and 125.7%, respectively, from the year-ago levels.
DoubleDown Interactive has a trailing four-quarter earnings surprise of 26%, on average. The stock has surged 56.5% in the past year. The Zacks Consensus Estimate for DDI’s 2024 sales and EPS indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Carnival has a trailing four-quarter earnings surprise of 320.4%, on average. The stock has increased 36.5% in the past year. The Zacks Consensus Estimate for CCL’s 2025 sales and EPS indicates an increase of 4.7% and 28.8%, respectively, from the year-ago levels.