JAKKS Pacific Misses Estimates - Analyst Blog
25 Outubro 2012 - 6:40AM
Zacks
Toy maker JAKKS Pacific
Inc. (JAKK) posted adjusted earnings of $1.13 per share in
the third quarter of 2012, lower than the Zacks Consensus Estimate
of $1.15 but higher than the year-ago earnings of $1.11 per
share.
On GAAP basis, reported earnings of $1.10 per share were in-line
with the year-ago level. Reported income included financial and
legal advisory fees. However, the company’s revenue declined 5.4%
year over year to $314.5 million in the third quarter, missing the
Zacks Consensus Estimate of $318.0 million.
Lower domestic product sales coupled with decline in product orders
before the crucial holiday season led to the top- and bottom-line
miss.
Gross margin in the quarter was 30.8% versus 31.8% in the
comparable quarter last year. The decline in margin was a result of
a shift in product mix leading to increased product costs and
tooling amortization.
Selling, general and administrative expenses (including direct
selling expenses and depreciation and amortization) climbed up to
$59.4 million or 18.9% of net sales from $55.6 million, or 16.7% of
net sales, last year.
Liquidity
At quarter-end, JAKKS had cash and cash equivalents and marketable
securities of $140.8 million versus $257.3 million at December 31,
2011.
Guidance
Prior to the earnings release, JAKKS had lowered its outlook for
fiscal 2012. The company cut its adjusted earnings per share
guidance to the range of 68—74 cents from the earlier projection of
$1.04—$1.08. The company also curtailed its sales guidance to the
range of $690–$700 million from the previous range of $720—$728
million.
JAKKS foresees a better business environment for itself in 2013 and
remains upbeat regarding its strong product line-up that includes
the launch of DreamPlay products as well as core product lines.
Our Take
We have a bearish view on the stock based on its top- and
bottom-line miss, lowered outlook for the full-year as well as
decelerating margins. The company also had to bear the brunt of
higher costs, including marketing and advertising expenses as well
as minimum license royalty guarantees. Decreased guidance
underscores management’s apprehension regarding a tough retail
environment in 2012.
JAKKS Pacific, which competes with the likes of Mattel
Inc. (MAT), currently carries a Zacks #5 Rank, which
translates into a short-term ‘Strong Sell’ rating. We are
maintaining our long-term Underperform recommendation on the
stock.
JAKKS PACIFIC (JAKK): Free Stock Analysis Report
MATTEL INC (MAT): Free Stock Analysis Report
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