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Why Funko Stock Popped Friday

By Rich Smith - Mar 12, 2021 at 11:02AM

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Funko beat earnings with a stick in 2020...and promises to do it again in 2021.

What happened

Shares of toy maker Funko (FNKO -1.80%) popped Friday after the company announced estimate-thumping earnings for its fiscal fourth quarter 2020 last night.

Expected to earn $0.14 per share on sales of $195.7 million, Funko instead earned $0.24 per share on sales of $226.5 million. Funko shares are up 8.2% in 10:25 a.m. EST trading in response.  

Funko Batman Pop toy.

Image source: Funko.

So what

Funko grew its sales only 6% year over year, but sales in the United States in particular surged 18%, helping to offset a 24% decline in sales in the European market, for example. Playing to the pandemic trend of more folks being stuck at home, bored, and wanting to play games rather than just collect figurines, Funko increased its exposure to board games and other products, growing "non-figure products" sales 30%.  

That worked out well for Funko on the bottom line, as the company transformed 2019's Q4 loss into a $0.24-per-share profit in Q4 2020. And Q4 2020 in turn saved the year for Funko. Instead of the year-long loss it had been heading toward, the company eked out a win for the year, earning $0.11 per share (down from $0.36 per share earned in 2019).

Now what

Looking ahead, Funko projects continued momentum as it moves into 2021, telling investors to expect net sales growth of between 25% and 30% this year. Given 2020's $652 million in sales, this implies that Funko could do between $815 million and $848 million in sales this year. And Funko predicts it will earn "adjusted earnings per diluted share" of between $0.84 and $0.96 on those sales.

All along both those ranges, Funko's predictions stand far above the $717 million in sales and $0.53 per share in profits that analysts were most recently projecting for the company -- an "earnings beat" in 2021, in other words. No wonder investors are pleased.

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