Mattel Meets Estimates - Analyst Blog
14 Outubro 2011 - 9:01AM
Zacks
Mattel Inc (MAT), the largest
manufacturer of toys in the world, reported third quarter 2011
earnings of 86 cents per share, in line with the Zacks Consensus
Estimate, but above the year-ago quarter earnings of 77 cents per
share. The better-than-expected results were driven by strong sales
of its core brands including Barbie, Hot Wheels and Other Girl
Brands as well as robust sales of the company’s entertainment
property Cars 2.
Quarter Highlights
During the quarter, net sales were $1,998.8 million, up 9% year
over year and also surpassed the Zacks Consensus Estimate of
$1,962.0 million. Net sales included a favorable foreign currency
impact of 2%. Worldwide gross sales were $2,183.2 million versus
$1,996.9 million reported in the prior-year period. U.S. gross
sales improved 6% year over year while international gross sales
rose 13% year over year.
Worldwide gross sales for the Mattel Girls & Boys Brands
business unit were up 15% year over year to $1,343.1 million.
Further, Worldwide gross sales for Barbie (up 17%), Hot Wheels (up
6%), Other Girls Brand (up 32%) and Entertainment business (up 14%)
witnessed significant upside. Fisher-Price Brands sales also spiked
1% to $748.9 million while the American Girl line grew 4% to $87.6
million.
Gross profit rose 2% from the prior-year quarter to $956.1
million, but gross margin contracted 330 basis points (bps) year
over year to 47.8% due to higher cost of sales. Operating
income expanded 11% to $397.6 million and operating margin enhanced
30 bps to 19.9% due to lower other selling and administrative
expenses (down 370 bps).
Financial Position
At the end of the third quarter, Mattel’s cash and cash
equivalents were $254.5 million compared with $960.5 million in the
third quarter of 2010. Long-term debt was $900.0 million versus
$960.0 million in the year-ago quarter.
The company’s debt-to-total-capital ratio was 33.0% at the end
of the reported quarter. As of September 30, 2011,
shareholders’ equity was $2.4 billion versus $2.9 billion, as of
September 30, 2010.
During the quarter, Mattel repurchased 6.6 million shares for
approximately $173 million. The company’s board of directors also
approved an additional share repurchase program worth $500
million.
Our Take
The company reported robust results and we expect estimates to
move up as holiday season is approaching and the company generates
a large proportion of its net revenues during this period based on
the strong demand for toys. The Zacks Consensus Estimates for 2011
and 2012 are pegged at $2.14 and $2.35, respectively.
We have a Neutral rating on Mattel over the long term as it
holds an industry leading position, strong balance sheet and is
reaping benefits from its cost-containment initiatives. Its focus
on top-line growth, margin expansion, building new franchises,
optimizing entertainment partnerships, expanding international
footprint and effective cash deployment also augur well.
However, we remain cautious on the stock based on the
challenging economic conditions, volatility in consumer demand,
higher manufacturing costs, ongoing litigation with MGA over the
rights to the Bratz dolls. In addition, competition from private
label toys and video game industry and unfavorable currency
exchange rates continue to remain headwinds.
Mattel currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating.
One of Mattel’s primary competitors, Hasbro
Inc. (HAS) is slated to release its third-quarter 2011
earnings on October 17, 2011, before the opening bell.
HASBRO INC (HAS): Free Stock Analysis Report
MATTEL INC (MAT): Free Stock Analysis Report
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