Toymakers on the Move
February 13, 2008
By Greg Sushinsky
Toy stocks had been in the news in the last few months, but it wasn’
t always good news. Weaker holiday season sales, the lack of any
mega-popular toy for the Christmas season, and growing costs,
along with product recalls in a generally softening economy made
for some recent troubles. Leading toy maker Mattel, Inc.(NYSE:
MAT), with a market cap of $7.9 billion, maker of Barbie dolls, Fisher-
Price toys and a slew of other well known toy names such as Hot
Wheels, Matchbox, Tyco, Dora the Explorer and many more, had
problems with toxic toys being made in China for the company.
Specifically, millions of toys were recalled due to toxic lead paint.
Yet despite this setback, it reported fourth quarter profits up 15%.
Their net income was 89 cents per share, or $328 million, up from
75 cents a share and $286 million. The company showed an
increase in sales of 4 percent, up from $2.11 billion to $2.19 billion.
Though its growth is expected to be modest near-term, it is
positioned, as are all the leading toymakers, to do well even in the
face of lagging consumer spending.
Hasbro (NYSE: HAS), about half the size of Mattel, is currently doing
even better. It saw its fourth quarter profits shoot up 24%, on rising
sales of 16 percent. Its revenue for the full year 2007 was up to
$3.84 billion, from $3.15 in 2006. The fourth quarter earnings were
84 cents per share, up from 62 cents the same quarter a year
earlier. For the full year, their EPS was $2.05 per share, up from
$1.21 in 2006. Hasbro has strong franchises with Transformers and
Star Wars toys. Additionally, they had no exposure to the
widespread toxic lead paint that Mattel had. Despite similar modest
growth projections as for Mattel, long term growth prospects for
Hasbro, as do the prospects for Mattel look decidedly robust long
term, since they have been streamlining operations for the past few
years.
The hottest franchise of any specific toy right now belongs to Jacks
Pacific (NASDAQ: JAKK), which has Hannah Montana dolls, from the
wildly popular hit tv and stage show. Jakks, which also makes a wide
range of other toys including pet toys, is much smaller than either
Hasbro or Mattel, with its $700 million market cap, had EPS of $2.47
for trailing twelve months’ earnings, and with the sales weaknesses
for the sector already factored in, 2008 estimates are for around
$2.00.
These stocks appeared to bottom in January, and with the toughest
sledding behind them, have begun to move up. The trio has been
steadily rising and now trade in their mid-range of the last twelve
month share prices.
February 13, 2008
By Greg Sushinsky
Toy stocks had been in the news in the last few months, but it wasn’
t always good news. Weaker holiday season sales, the lack of any
mega-popular toy for the Christmas season, and growing costs,
along with product recalls in a generally softening economy made
for some recent troubles. Leading toy maker Mattel, Inc.(NYSE:
MAT), with a market cap of $7.9 billion, maker of Barbie dolls, Fisher-
Price toys and a slew of other well known toy names such as Hot
Wheels, Matchbox, Tyco, Dora the Explorer and many more, had
problems with toxic toys being made in China for the company.
Specifically, millions of toys were recalled due to toxic lead paint.
Yet despite this setback, it reported fourth quarter profits up 15%.
Their net income was 89 cents per share, or $328 million, up from
75 cents a share and $286 million. The company showed an
increase in sales of 4 percent, up from $2.11 billion to $2.19 billion.
Though its growth is expected to be modest near-term, it is
positioned, as are all the leading toymakers, to do well even in the
face of lagging consumer spending.
Hasbro (NYSE: HAS), about half the size of Mattel, is currently doing
even better. It saw its fourth quarter profits shoot up 24%, on rising
sales of 16 percent. Its revenue for the full year 2007 was up to
$3.84 billion, from $3.15 in 2006. The fourth quarter earnings were
84 cents per share, up from 62 cents the same quarter a year
earlier. For the full year, their EPS was $2.05 per share, up from
$1.21 in 2006. Hasbro has strong franchises with Transformers and
Star Wars toys. Additionally, they had no exposure to the
widespread toxic lead paint that Mattel had. Despite similar modest
growth projections as for Mattel, long term growth prospects for
Hasbro, as do the prospects for Mattel look decidedly robust long
term, since they have been streamlining operations for the past few
years.
The hottest franchise of any specific toy right now belongs to Jacks
Pacific (NASDAQ: JAKK), which has Hannah Montana dolls, from the
wildly popular hit tv and stage show. Jakks, which also makes a wide
range of other toys including pet toys, is much smaller than either
Hasbro or Mattel, with its $700 million market cap, had EPS of $2.47
for trailing twelve months’ earnings, and with the sales weaknesses
for the sector already factored in, 2008 estimates are for around
$2.00.
These stocks appeared to bottom in January, and with the toughest
sledding behind them, have begun to move up. The trio has been
steadily rising and now trade in their mid-range of the last twelve
month share prices.
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