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Why Mattel Stock Soared Today

By Steve Symington – Apr 26, 2019 at 2:16PM

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The toy maker continued to make progress with its turnaround to start 2019.

What happened

Shares of Mattel (MAT -2.14%) climbed as much as 10.8% early Friday, then settled to trade up 3.1% as of 1:15 p.m. EDT after the toy maker announced better-than-expected first-quarter 2019 results.

More specifically, Mattel's quarterly net sales fell 3% as reported (but climbed 1% on a constant-currency basis) to $689.2 million, translating to a net loss of $183.7 million, or $0.53 per share, narrowed from a $0.90 per-share loss in the same year-ago period. Analysts, on average, were expecting a net loss of $0.56 per share on revenue of $645 million.

Stock market chart with dark blue background indicating gains

IMAGE SOURCE: GETTY IMAGES.

So what

On one hand, Mattel can credit its top-line progress to a combination of growth from its Barbie line (with gross sales up 7% as reported and 13% at constant currency), its Hot Wheels products (up 4% as reported and 9% adjusted for currencies), and its combined action figures, building sets, and games business (up 18% as reported and 22% in constant currency). But Mattel's Fisher-Price and Thomas & Friends brands saw gross sales decline 8% as reported (and 5% at constant currencies).

Mattel CFO Joe Euteneuer noted this marks the company's third straight quarter of profitability improvements as well, particularly as its strategic "structural simplification" initiatives reached $610 million of annual run-rate savings exiting the quarter.

Now what

During the subsequent conference call, Euteneuer added that despite strong top-line momentum, Mattel is not changing its previously provided full-year outlook -- which calls for gross sales in 2019 to be roughly flat at constant currencies -- both as the "vast majority of the year is still ahead of us" and considering lost sales from a recent voluntary recall of Fisher-Price's Rock 'n Play Sleeper product. 

Nonetheless, investors appear to be more than pleased with Mattel's strong start to the year, and the stock is responding in kind.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Mattel Stock Quote
Mattel
MAT
$17.34 (-2.14%) $0.38

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