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Mattel (NasdaqGS:MAT) Q3 2020 Earnings Preview

in EARNINGS/INVESTING IDEAS by

Mattel, Inc. (NasdaqGS:MAT) is scheduled to report Q3 earnings results on October 22, 2020.

The company is expected to report earnings of $0.38/share on revenue of $1.456 billion. The consensus earnings per share (EPS) of $0.38/share is based on a poll of 14 analysts and represents a growth in eps of 45.2% over the same quarter last year, when the company reported earnings of $0.26/share.

The revenue forecast of $1.456 billion based on a poll of 12 analysts implies a year-over-year (YoY) decline in revenue of −1.7%. Last year the company reported $1.482 billion in revenue for the quarter.

Expected to report EPS growth of 45.2% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,456.11 $1,481.60 −1.7%
EPS $0.38 $0.26 45.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Mattel, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.34 -$0.26 23.8% Beat
Q1, 2020 -$0.41 -$0.56 -37.2% Missed
Q4, 2019 $0.02 $0.11 391.9% Beat
Q3, 2019 $0.19 $0.26 36.4% Beat
Q2, 2019 -$0.39 -$0.25 35.9% Beat
Q1, 2019 -$0.55 -$0.44 −19.4% Missed
Q4, 2018 -$0.15 $0.04 127.6% Beat
Q3, 2018 $0.18 $0.18 2.5% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $11.36 $11.34 −0.2% Decline
May 5, 2020 $8.58 $8.49 −1.0% Decline
February 13, 2020 $14.51 $13.95 −3.9% Decline
October 29, 2019 $10.30 $12.02 16.7% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.07, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.07 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Mattel, Inc. is currently trading at $12.53/share, down −0.6% for the day. The company is trading at approximately 84.5% of its 52-week high of $14.83/share. The company’s stock price is up 10.4% since the last earnings report and down −0.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 68.18 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:MAT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −17.44 and a forward P/E multiple of −104.83.

Mattel, Inc.’s current share price also implies a price-to-book (P/B) multiple of 50.44. The following table summarizes some other key fundamental ratios:

Data as of October 20, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $12.53
P/E Ratio −17.4x
P/E Ratio (Fwd) −104.8x
PEG Ratio −2.3
Total Debt / Total Capital 45.1%
Levered Free Cash Flow -$9.898 million
EV / EBITDA 23.4x

Finbox

Mattel, Inc. is a mid-cap stock with a market capitalization of $4.345 billion and a total enterprise value of $7.462 billion. The company operates in the Consumer Discretionary sector and the Leisure Products industry.

Mattel, Inc., a children’s entertainment company, designs and produces toys and consumer products worldwide. The company operates through North America, International, and American Girl segments. It offers dolls and accessories, as well as content, gaming, and lifestyle products for children under the Barbie, Enchantimals, and Polly Pocket brands; dolls and books under the American Girl brand name; diecast cars, tracks, playsets, and play products for kids, adults, and collectors under the Hot Wheels brand name; and infant, toddler, and preschool products comprising content, toys, live events, and other lifestyle products under the Fisher-Price and Thomas & Friends, Power wheels, Fireman Sam, and Shimmer and Shine brands. The company also provides action figures, building sets, and games under the MEGA, UNO, Toy Story (Disney Pixar), Jurassic World (NBCUniversal), and WWE brands; and licensor partner brands, including Disney, WWE, Nickelodeon, Warner Bros. Consumer Products, NBCUniversal, and Microsoft. It sells its products directly to consumers through its catalog, Website, and proprietary retail stores; retailers, including discount and free-standing toy stores, chain stores, department stores, and other retail outlets; and wholesalers, as well as through agents and distributors. Mattel, Inc. was founded in 1945 and is headquartered in El Segundo, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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