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LeapFrog Disappoints in 2013: The Perfect Opportunity to Buy or Run for the Exits?

LeapFrog (NYSE: LF  ) turned in a terrible holiday quarter, with its 2013 Q4 revenue down 24% year over year, and its gross margins down 5.9%. Is the dominant player in children's electronics suddenly in serious trouble, or does this represent a good opportunity for investors to double down? In the following video, Motley Fool consumer-goods analyst Blake Bos takes investors through LeapFrog's most recent quarter, and paints a picture of the good, the bad, and the ugly happening with the company today.

Blake highlights that a mix of the shortened holiday shopping period and retailer markdowns of the company's LeapPad2 hurt both the company's sales and its margins. New tablet offerings from competitors look to have performed poorly this holiday season, though they occupied a lot of retailer shelf space, which had a negative impact on sales of LeapFrog's products.

However, it's not all bad news. LeapFrog is prepping to launch an all-new product this year in a new category, its products still make up 15 out of the 20 top sellers in the kids electronics category on, and international growth looks strong going forward, with revenue in France up 40% year over year. The company is also debt-free, has a giant cash hoard, and has initiated a share-buyback program. In the video, Blake discusses what to expect from the company in 2014, tells investors why 2015 could be a big year for LeapFrog, and says whether he sees it as a buy, sell, or hold today.

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  • Report this Comment On March 08, 2014, at 3:21 AM, obga18 wrote:

    this stock is based upon motley fool's search criteria for great stocks :

    debt free: check

    high insider owner ship: check

    off 52 high: check.

    but can it beat the niche market that is consumer electronics? what prevents people from buying tabs and purchasing apps...this is what is preventing me from buying LF stocks.

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Blake Bos

The Motley Fool's industrials analyst, I specialize in 3-D printing and also do my best to stay up-to-date in the fields of robotics and oceanic transportation. Follow me on Twitter, Google+, and/or Facebook below for the most important 3-D printing industry developments and other great stories.

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9/1/2015 4:02 PM
LF $0.92 Down -0.03 -2.97%
LeapFrog Enterpris… CAPS Rating: ***