Is it Time to Buy Mattel Stock?

Shares of toy products and content creator Mattel, Inc. NYSE: MAT stock is finally breaking out after a multi-year lag. The iconic toy entertainment company has bolstered its position with various major entertainment brands in addition to its own evergreen IPs like Barbie and Hot Wheels to position itself for sustained growth. Its Q4 2021 earnings beat on both top and bottom lines despite supply chain and logistics disruptions. The Company raised its full-year 2022 guidance and boldly provided 2023 goals. The Company is running on all cylinders as both a lockdown and reopening play as it also diversified into non-fungible tokens (NFTs). Prudent investors looking for exposure in the toy segment can watch for opportunistic pullbacks in shares of Mattel.

Q4 Fiscal 2021 Earnings Release

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On Feb. 9, 2022, Mattel released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported an earnings-per-share (EPS) profits of $0.53 beating analyst estimates for a profit of $0.33, by $0.22. Revenues rose 10.4% year-over-year (YoY) to $1.79 billion, beating analyst estimates for $1.66 billion. Net sales for full-year 2021 rose 19% YoY to $5.46 billion as gross margins fell (-80) basis points to $48.1%. Operations generated $485 million in cash flows and free cash flows of $334 million, up $167 million. Mattel CEO Ynon Kreiz commented, ““Mattel’s results for the quarter and full year came in well ahead of expectations, capping another exceptional performance for the company. We have made significant progress on our transformation strategy over the last few years, and our turnaround is now complete. We are in growth mode and believe we are well-positioned to continue our momentum, with 2022 guidance exceeding prior goals and an even stronger outlook for 2023.”

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Raised Guidance Estimates

Mattel raised its guidance expectations for fiscal full-year 2022 EPS in the range of $1.42 to $1.48 on revenue growth of 8% to 10% or $5.89 billion to $6 billion versus $5.52 billion consensus analyst estimates. The Company expects net sales to rise in high single digits and adjusted EPS greater than $1.90 as goals to meet in 2023.

Conference Call Takeaways

CEO Kreiz detailed how the Company overcame major global supply chain disruptions to ensure meeting consumer demand for the holiday season resulting in a 10% jump in net sales and sixth consecutive quarter of YoY growth. Mattel outpaced the industry to gain global market share for the second year in a row. In Q4 Mattel was the top manufacturer in three of the top seven properties worldwide also resulting in six consecutive quarter of market share growth. He commented that retail sales return to a more normalized and balanced omni-channel climate as e-commerce stabilized growing 2% for the quarter and 6% for 2021. He noted, “Our products resonated with consumers at levels we have not seen in years. We have also been very successful in making Mattel a partner of choice for the major entertainment companies and see this as another growth lever. In addition to our own IP, we now have a formidable lineup of evergreen properties from Microsoft, Nickelodeon, Nintendo, Universal, Warner Brothers, WWE, as well as Disney.” Mattel inked a multi-year worldwide licensing agreement with Disney for its Frozen, Disney Princess and Little Mermaid properties, with a live action movie in the works for the latter. Gross billings for dolls were up 21% for the year. The Company is also planning on boosting growth for its Thomas and Fisher-Price product lines. He concluded, “The company has made significant progress over the last few years on our transformation strategy. Our turnaround is complete. We believe we're well positioned to continue our strong momentum and are excited to be guiding to even higher growth in 2022 and higher goals in 2023.”