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Mattel (MAT) Stock Plunges as Q4 Earnings & Revenues Lag

Shares of Mattel, Inc.MAT tumbled nearly 11% in after-hours trading on Jan 25, after the company posted lower-than-expected earnings and revenue for the fourth quarter of 2016.

Earnings & Revenue Discussion

Mattel's adjusted earnings per share of 52 cents were lower than the Zacks Consensus Estimate of 71 cents. Moreover, the figure compared unfavorably with the year-ago quarter earnings of 63 cents per share on account of lower sales. Notably, adjusted earnings exclude restructuring costs.

Revenues of $1.83 billion slipped 6% year over year in constant currency and missed the consensus mark of $1.98 billion by 7.6%. Sales declined 8% year over year, including the impact of foreign currency.

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Quarter Highlights

Gross sales fell 5% year over year due to a decline at Mattel Girls & Boys Brands. At constant currency, gross sales were down 1%.

Gross sales in North America (including the U.S., Canada and American Girl) fell 5%, while that in the International region tumbled 4% mainly due to currency headwinds. Meanwhile, on a constant currency basis, gross sales in North America still declined 5% while the same was up 4% year over year in the International region.

Notably, gross margin in the reported quarter decreased 320 bps to 47.0% from 50.2% recorded in the year-ago quarter, largely due to currency headwinds and elevated discounting.

Meanwhile, adjusted operating income for the quarter was $269.2 million, lower than the prior-year quarter figure of $306.3 million due to lower revenues.

Segment Details

The company reports results under four segments, namely, Mattel Girls & Boys Brands, Fisher-Price Brands, American Girl Brands, and Construction and Arts & Crafts Brands.

At constant currency, worldwide gross sales at Mattel Girls & Boys Brands declined 3% to $1.05 billion year over year on the back of a 35% plunge in the Other Girls brand. However, a 1% surge in Barbie sales, 18% increase in the Wheels category and 2% growth in the Entertainment business, in constant currency, somewhat offset the losses.

Gross sales at Fisher-Price Brands , which includes Fisher-Price Core, Fisher-Price Friends and Power Wheels, climbed 2% year over year to $607.7million at constant currency.

Gross sales at American Girl Brands were $283.9 million, up 5% from the year-ago quarter on a constant currency basis.

Gross sales at Construction and Arts & Crafts Brands , which includes the Mega Bloks and RoseArt brands, were $124.8 million, up 1% from fourth-quarter 2015 at constant currency.

Mattel, Inc. Price, Consensus and EPS Surprise

Mattel, Inc. Price, Consensus and EPS Surprise | Mattel, Inc. Quote

Full Year 2016 Results

For the year, the company reported adjusted earnings of $1.06 per share, lagging the Zacks Consensus Estimate of $1.27 and the year-ago earnings figure of $1.27 by 27.6% each.

Revenues of $5.46 billion missed the Zacks Consensus Estimate of $5.58 billion by 2.2%. Further, revenues decreased 4% from the year-ago level.

Zacks Rank & Stocks to Consider

Mattel presently has a Zacks Rank #4 (Sell). Better-ranked stocks in the broader consumer discretionary sector include:

Planet Fitness, Inc. PLNT with a Zacks Rank #2 (Buy). The company has posted positive earnings surprises in each of the trailing four quarters, with an average beat of 16.28%.

SeaWorld Entertainment, Inc. SEAS is also a Zacks Rank #2 company. For fiscal 2017, its EPS is expected to grow a staggering 159%, while the expectation of the analysts from the industry is pegged at 14.8%.

Extended Stay America, Inc. STAY has also beaten estimates in each of its trailing four quarters, recording an average beat of 8.02%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

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Mattel, Inc. (MAT): Free Stock Analysis Report

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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