Is Funko, Inc. FNKO back? This Zacks Rank #1 (Strong Buy) has new leadership and has reduced its inventory and debt.
Funko is a pop culture lifestyle brand. Its products includes vinyl figures, action toys, plush, apparel, housewares and accessories which allow fans to connect with their favorite pop culture brands and characters. In addition to its popular Pop! brand, it also owns Loungefly.
It is a small cap company with a market cap of $658 million.
New Leadership Takes the Helm
Funko has gone through a lot over the last 2 years including a shake-up of its leadership. But it now has two new leaders at the top of its management team.
Cynthia Williams took over as CEO in June 2024. In August 2024, Yves Le Pendeven, who had been with Funko for 5 years in various roles including Acting Chief Financial Officer, became the official CFO.
Funko Beats Big on Earnings in Q2 2024
On Aug 8, 2024, Funko reported its second quarter results and beat on the Zacks Consensus for the second quarter in a row. Earnings were $0.10 versus the Zacks Consensus of a loss of $0.14.
Sales rose year-over-year to $247.7 million from $240 million in 2023.
Core collectibles was the strong category, rising 6.4%. Sales were especially strong in Europe, which jumped 20.8%.
However, in the US, its largest market, sales fell 4.7%.
Funko has made great strides in reducing its inventory. In 2022, it was excess inventory which contributed to the company’s struggles.
Inventory was $109 million as of June 30, 2024, down from $119.5 million as of Dec 31, 2023.
Funko has also reduced its debt. Total debt was $223.9 million as of June 30, 2024, down from $273.6 million as of Dec 31, 2023.
Funko Reiterated Its 2024 Guidance
Funko reiterated its full year 2024 guidance, which assumes a strong holiday season. It sees sales of $1.047 billion to $1.103 billion.
The analysts are expecting improvement in the earnings outlook this year and next.
1 estimate has been raised in the last 60 days for 2024 which has pushed the Zacks Consensus up to $0.00 from a loss of $0.02. That is a big improvement from 2023 where the company lost $0.87.
2025 looks more bullish as analysts are looking for earnings of $0.35.
Shares Rally on Hope for the Turnaround
Funko shares plunged in 2022 when it was caught with excess inventory it had to write down. Many thought the Funko Pop! phenomena was over.
But in 2024, investors are now pricing in the new management. Shares of Funko have soared 62% this year, easily beating the S&P 500.
Image Source: Zacks Investment Research
In addition to the Zacks Rank of Strong Buy, Funko also has the highest Zacks Style Scores for Value and Growth, of A.
Funko will report third quarter earnings in early November.
There are still challenges ahead, but investors who are interested in a play on fandom and the consumer, might want to keep Funko on their short list.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
