JAKKS Misses, Reaffirms Outlook - Analyst Blog
20 Outubro 2011 - 8:15AM
Zacks
JAKKS Pacific
Inc.(JAKK) reported third quarter 2011 adjusted earnings
of $1.11 per share, below the Zacks Consensus Estimate of $1.24.
Quarterly earnings improved considerably from $1.06 per share in
the year-ago quarter. However, on a GAAP basis, reported earnings
of $1.10 per share were below the year-ago quarter earnings of
$1.23. The lower-than-expected results were due to negative
top-line growth.
The company’s revenue dropped 4.7%
year over year to $332.4 million and also missed the Zacks
Consensus Estimate of $357.0 million.
Selling, general and administrative
expenses slipped 1.6% year over year to $36.5 million mainly due to
lower incentive compensation, partially offset by increased legal
and other professional fees and expenses. Hence, operating margin
enhanced 30 basis points to 15.1%.
Financial
Position
At quarter end, JAKKS had cash and
cash equivalents and marketable securities of $232.2 million versus
$278.3 million at December 31, 2010. The company’s long-term debt
was $91.5 million versus $89.5 million at December 31, 2010.
The company also continued to
enhance shareholder value as during the quarter, the company
repurchased 1.21 million shares for $19.3 million and announced its
first-ever annual cash dividend of 40 cents per share.
Guidance
For 2011, JAKKS reaffirmed its
adjusted earnings range of $1.32 and $1.35 per share, up 4% to 6%
year over year. The company continues to expect sales in the range
of $770–$775 million, implying a growth of 3% to 4%.
The company remains upbeat
regarding the upcoming holiday season based on its strong product
line up and expects growth across all units, including role play
toys, action figures, Halloween costumes, electronics, kids’
furniture and dolls. Management also remains optimistic on its
recent acquisition of Hong Kong-based Moose Mountain Toymakers
Limited for an undisclosed amount. Moose Mountain is a 15-year old
privately held company with a leadership position in the sale and
manufacture of sports arcade products, foot to floor ride-ons,
tents and safe soft play environments. However, JAKKS expects cost
inflation to continue in the remainder of 2011.
JAKKS Pacific expects stable
margins for the remainder of the year driven by an improved supply
chain and introduction of higher-margin products.
Our Take
We remain optimistic on JAKKS’
long-term growth potential with product launches, and a strong
financial condition. Moreover, the company is eagerly awaiting the
holiday season as it generates a large proportion of its net
revenues during this period based on the strong demand for toys.
Hence, we expect the estimates to rise in the future. However,
higher input and labor costs concern us.
JAKKS Pacific currently retains a
Zacks #3 Rank, which translates into a short-term Hold rating. We
are also maintaining our long-term Neutral recommendation on the
stock.
One of JAKKS’ primary competitors,
Mattel Inc. (MAT) reported third quarter 2011
earnings of 86 cents per share in line with the Zacks Consensus
Estimate.
JAKKS PACIFIC (JAKK): Free Stock Analysis Report
MATTEL INC (MAT): Free Stock Analysis Report
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