Personal Finance
HAS

Why Shares of Mattel Are Up 5% Monday

A teddy bear surrounded by plastic toys.

What happened

Shares of Mattel, Inc . (NASDAQ: MAT) , a manufacturer of toy products with brands including Barbie, Hot Wheels, and Fisher-Price, among others, are up 5.3% as of 3:20 p.m. EDT, after competitor Hasbro, Inc . (NASDAQ: HAS) posted a weak first quarter.

So what

Hasbro reported a worse than expected result thanks to the bankruptcy of Toys 'R' Us , which initially sent its stock 8% lower before recovering to its current 3% gain on Monday. Hasbro reported first-quarter revenue roughly $100 million below forecast but anticipates meeting its $600 million to $700 million operating cash flow target for 2018.

The upside for Mattel and Hasbro investors was that management of the latter believes the worst of revenue declines will be over during the first half of 2018, setting the stage for sales recovery sooner rather than later. Management also believes there will be no further material expense from the Toys 'R' Us bankruptcy -- good news for both Mattel and Hasbro.

A teddy bear surrounded by plastic toys.

Image source: Getty Images.

Now what

While it's good news for investors to hear the worst is likely over -- remember that Toys 'R' Us generated 9% of Mattel's sales in 2017 -- there's still a lot of progress needed for Mattel's slow-moving turnaround. Newly appointed CEO Ynon Kreiz is now leading a new turnaround plan focusing on core brand productivity and improving manufacturing in an attempt to improve profits during the second half of 2018. Today's 5% jump in stock price after Hasbro's poor quarter was a pleasant surprise after a rough March , but investors should understand that there's a lot of work left to make this turnaround successful in 2018.

10 stocks we like better than Mattel

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Mattel wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 2, 2018

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Hasbro. The Motley Fool has a disclosure policy .

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.

In This Story

HAS MAT

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More