What happened
Shares of Mattel, Inc. (MAT 4.35%), a global toy and consumer entertainment company, soared as much as 25% higher Wednesday morning after beating third-quarter estimates.
So what
Revenue increased 3% to $1.48 billion, which topped analysts' estimates of $1.43 billion. Hot Wheels partially drove that revenue result with a 13% increase in global sales for vehicles. Adjusted earnings per share checked in at $0.26, well ahead of the prior year's $0.18-per-share result and of analysts' estimates calling for $0.16 per share.
Beyond the top- and bottom-line figures were a couple of other big takeaways. First, the whistleblower allegations that prevented a $250 million bond sale earlier in 2019 were resolved and, while the company will restate two quarters of earnings from 2017, there won't be a financial impact. Second, management noted that it didn't see any impact from tariffs during the third quarter and doesn't expect any for the remainder of 2019.
A Hot Wheels play set inspired by Mario Kart. Image source: Mattel.
"Our third quarter performance demonstrates the continued momentum of our multi-year turnaround and consistent progress in transforming Mattel into an IP-driven, high-performing toy company," said Ynon Kreiz, Mattel chairman and CEO, in a press release.
Now what
The strong third-quarter results highlighted a fifth consecutive quarter of improving EBITDA, gross margin, earnings per share, and reported operating income. It was also the second consecutive quarter of revenue growth, and it could give investors confidence that the company is a solid consumer goods stock and truly on its way to transforming itself after years of turnaround efforts. Investors will now focus on new movies and licensing agreements to see if the company can capitalize on popular products to drive further revenue growth.
