Q1 Earnings Outperformers: Mattel (NASDAQ:MAT) And The Rest Of The Toys and Electronics Stocks
Let's dig into the relative performance of Mattel (NASDAQ:MAT) and its peers as we unravel the now-completed Q1 toys and electronics earnings season.
The toys and electronics industry presents both opportunities and challenges for investors. Established companies often enjoy strong brand recognition and customer loyalty while smaller players can carve out a niche if they develop a viral, hit new product. The downside, however, is that success can be short-lived because the industry is very competitive: the barriers to entry for developing a new toy are low, which can lead to pricing pressures and reduced profit margins, and the rapid pace of technological advancements necessitates continuous product updates, increasing research and development costs, and shortening product life cycles for electronics companies. Furthermore, these players must navigate various regulatory requirements, especially regarding product safety, which can pose operational challenges and potential legal risks.
The 6 toys and electronics stocks we track reported an ok Q1; on average, revenues beat analyst consensus estimates by 0.8%. while next quarter's revenue guidance was 3.3% below consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and toys and electronics stocks have held roughly steady amidst all this, with share prices up 0.7% on average since the previous earnings results.
Mattel (NASDAQ:MAT)
Known for the creation of iconic toys such as Barbie and Hotwheels, Mattel (NASDAQ:MAT) is a global children's entertainment company specializing in the design and production of consumer products.
Mattel reported revenues of $809.5 million, down 0.6% year on year, falling short of analysts' expectations by 2.8%. It was a strong quarter for the company, with an impressive beat of analysts' earnings estimates and a solid beat of analysts' operating margin estimates.
Ynon Kreiz, Chairman and CEO of Mattel, said: “We are off to a good start to the year with significant gross margin expansion, positive Adjusted EBITDA, and very strong improvement in free cash flow. Trends in consumer demand for our product improved through the quarter and we expect to outpace the industry and gain market share in 2024. We are executing our strategy to grow our IP-driven toy business and expand our entertainment offering.”
Mattel achieved the fastest revenue growth but had the weakest performance against analyst estimates of the whole group. The stock is down 7% since the results and currently trades at $17.43.
Is now the time to buy Mattel? Access our full analysis of the earnings results here, it's free.
Best Q1: Hasbro (NASDAQ:HAS)
Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ:HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.
Hasbro reported revenues of $757.3 million, down 24.3% year on year, outperforming analysts' expectations by 2.2%. It was an exceptional quarter for the company, with an impressive beat of analysts' earnings estimates.
Hasbro had the slowest revenue growth among its peers. The stock is up 0.7% since the results and currently trades at $58.55.
Is now the time to buy Hasbro? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Sonos (NASDAQ:SONO)
A pioneer in connected home audio systems, Sonos (NASDAQ:SONO) offers a range of premium wireless speakers and sound systems.
Sonos reported revenues of $252.7 million, down 16.9% year on year, exceeding analysts' expectations by 2.1%. It was a weak quarter for the company, with a miss of analysts' operating margin and EPS estimates.
The stock is down 11.5% since the results and currently trades at $15.56.
Read our full analysis of Sonos's results here.
Bark (NYSE:BARK)
Making a name for itself with the BarkBox, Bark (NYSE:BARK) specializes in subscription-based, personalized pet products.
Bark reported revenues of $121.5 million, down 3.6% year on year, falling short of analysts' expectations by 0.8%. It was a weak quarter for the company, with revenue guidance for next quarter missing analysts' expectations.
Bark had the weakest full-year guidance update among its peers. The stock is down 2.5% since the results and currently trades at $1.39.
Read our full, actionable report on Bark here, it's free.
Funko (NASDAQ:FNKO)
Boasting partnerships with media franchises like Marvel and One Piece, Funko (NASDAQ:FNKO) is a company specializing in creating and distributing licensed pop culture collectibles.
Funko reported revenues of $215.7 million, down 14.4% year on year, falling short of analysts' expectations by 2.1%. It was a solid quarter for the company, with an impressive beat of analysts' earnings estimates and an impressive beat of analysts' operating margin estimates.
Funko achieved the highest full-year guidance raise among its peers. The stock is up 41.6% since the results and currently trades at $9.68.
Read our full, actionable report on Funko here, it's free.
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