Looking at a toy stock requires a wide-angle lens.
Quarter-to-quarter action is generally irrelevant because of
the seasonal nature of the business.Mattel (
) CEO Bryan Stockton refers to the first half of the calendar
year as "the preseason." The second half of the year is when most
of the scoring occurs.
Over the past three years, the second half accounted for 85%
to 90% of Mattel's full-year earnings.
The Street expects Mattel's 2013 earnings to total $2.75 a
share, a 9% increase over 2012. In 2014, analysts expect a 9% pop
to $3 a share.
Mattel pays a quarterly dividend of 36 cents a share. The
annualized dividend is up 16% from the prior year. The yield is
Before 2011, Mattel paid a dividend once a year. In 2011, the
company began paying quarterly dividends.
The payout has grown 92% since 2009.
Mattel's fundamentals are strong. Pretax margin in 2012 was
17%, a nine-year high. Return on equity was 31%, also a nine-year
The stock has cleared the 46.64 buy point of a handle in a
Research indicates that a first- or second-stage breakout is
more likely to work than breakouts from later-stage bases.
Mattel's up-down volume ratio is a bullish 1.6, well above the
neutral 1.0 level. The Accumulation/Distribution Rating is B+,
pointing to institutional buying.
For the toy industry, though, much hinges on consumer
spending. While some market watchers say recent improvements in
U.S. economic data should boost consumer spending in 2014, others
argue that ObamaCare will force more people to pay more for
health care and insurance, leaving less money for discretionary
The U.S. toy market makes up about a quarter of the global
market, according to NPD Group, a consumer market researcher. The
U.S. accounts for 55% of Mattel's revenue.