Share price of
JAKKS Pacific Inc.
) surged around 23% on Feb 26, 2014 after it posted narrower year
over year loss.
Malibu, Calif.-based toy maker, JAKKS Pacific's loss of 50 cents
per share (adjusted for a one-time non-cash charge related to the
impairment of deferred tax assets) in the fourth quarter of 2013
bettered the Zacks Consensus Estimate of a loss of 87 cents per
share and the year-ago loss of $1.24. A better-than-expected top
line performance and lower expenses boosted the bottom line in
JAKKS Pacific's revenues increased approximately 3.1% year over
year to $137.7 million in the fourth quarter and beat the
Zacks Consensus Estimate of $127.0 million by 8.4%. Higher sales
in the Role Playing, Novelty and Seasonal Toys segment led to the
improved top line.
Behind the Headline Numbers
Gross margin in the quarter was 28.1%, up 510 basis points year
over year, mainly due to improved sales and lower costs of sales.
Selling general and administrative expense ratio declined 660
basis points to 39.8%.
In 2013, the company posted a loss of $2.43 per share, better
than the year-ago loss of $4.37 as well as the Zacks Consensus
Estimate of a loss of $2.51. It was also narrower than
management's guidance of a loss of $2.56 per share. The loss
includes inventory impairment and restructuring charges.
Excluding these charges, the company posted adjusted loss of 89
cents compared with a loss of 39 cents in 2012.
Total revenue was $632.9 million, down 5.0% year over year.
However, it surpassed the Zacks Consensus Estimate of $624.0
million by 1.4% and management's guidance of $620.0 million.
First Quarter Guidance Up Y/Y
For the first quarter of 2014, the company expects loss in the
range of 77 cents and 81 cents, narrower than a loss of $1.26
incurred during the year-ago period. However, the projected
figure is wider than the Zacks Consensus Estimate of a loss of 70
cents per share. Revenues are expected in the range of $72.0
million to $75.0 million.
Guidance for 2014
The company expects to return to profitability in 2014 and
expects earnings in the range of 30 cents to 40 cents per share.
The improved guidance is attributable to cost-saving and other
margin improvement initiatives undertaken in 2013.
Given the aggressive retail efforts, the company expects sales to
gain momentum in 2014 and beyond. It expects 2014 revenues in the
range of $633.0 million to $640.0 million.
Despite posting a loss in the quarter, this Zacks Rank #3 (Hold)
company performed better than expected on the back of an improved
top line performance and cost saving initiatives undertaken
during the second half of 2013. These cost saving initiatives
include elimination of underperforming units and rightsizing of
Moreover, the company's international expansion efforts have
started yielding benefits leading to improved margins. Going
forward, we remain optimistic about the company's product
launches and organic growth initiatives, which include securing
Some better-ranked stocks in the sector include
Glu Mobile, Inc.
Take-Two Interactive Software Inc.
). While Glu Mobile carries a Zacks Rank #1 (Strong Buy),
Take-Two Interactive Software Inc. holds a Zacks Rank #2 (Buy).
Another toy company,
) recently posted dismal fourth quarter 2013 results with
earnings and revenues missing the Zacks Consensus Estimate.
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