Opinions
John Petrides
Mattel
MAT-Q
PAST TOP PICK
Oct 24, 2017
$15.400
Stock price when the opinion was issued
household goods
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BUY
Has long liked it. There was a report today that there are takeover talks with a pair of private equaity firms. Shares surged 11%. Also, the company reported much-better-than expected sales, up 20% YOY, and a surrise profit. They affirmed their full-year forecast, though didn't rise it.
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TOP PICK
Stockchase Research Editor: Michael O'Reilly The long time toy manufacturer has worked hard to re-invent itself, partnering with Disney and Universal and reviving iconic brands like Barbie, Hot Wheels and Fisher Price. It even has pledged to use 100% recycled bio-based plastics. Its management during pandemic supply-chain threats were expertly handled as reflected in their earnings profit that beat expectations by 150%, when a loss was expected, while supporting a strong 42% ROE. It has prudently used some cash reserves to aggressively retire debt. We recommend a stop loss at $19, looking to achieve $33 -- upside potential over 30%. Yield 0% (Analysts’ price target is $33.33)
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DON'T BUY
They just delivered sub-optimal numbers. Suffered supply chain shortages last year. Maybe there was less demand after Covid? We knew things were bad when they pulled their forecast last October. Q4 revenue was down 22% YOY and an 11-cent earnings miss. Their latest full-year forecast is weaker.
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Advertising
(A Top Pick Feb 9/17. Down 38%.) This has been a dog this year. One problem is e-commerce on big box stores. Also, they have new management that is still trying to correct their brands and turn around sales. The new CEO is a former Google executive, and is bringing in a completely different attitude and vision to the toy industry. Barbie, American Girl and Fisher-Price have great brand power, and should and could be used better in a digital world where the company can earn more money.