Mattel (MAT -1.25%) stock made like a Jack-in-the-box this morning, popping up 12.5% through 10:55 a.m. ET after reporting a big fourth-quarter earnings beat after the market closed Tuesday.
For the period, analysts had forecast Mattel would earn only $0.20 per share, adjusted for one-time items, on sales of $1.63 billion. Instead, Mattel reported adjusted earnings of $0.35 per share on sales of $1.65 billion.
Mattel Q4 earnings
Mattel's sales grew 2% year over year, and the gross profit margin it earned on those sales expanded by 190 basis points to 50.7%. On the bottom line, Mattel's earnings as calculated according to generally accepted accounting principles (GAAP) exceeded its adjusted earnings, coming in at $0.42 per share -- exactly equal to 2023's Q4 GAAP earnings.
For the full year, Mattel's sales declined by 1% to $5.4 billion, but it improved its gross margin by 330 basis points to 50.8%. The biggest improvement was on Mattel's bottom line, where GAAP earnings per share were $1.58, much improved over the $0.60 per share Mattel earned in 2023.
Is Mattel stock a buy?
CEO Ynon Kreiz called 2024 a "year of strong operational excellence for Mattel," and predicted even bigger things for 2025. Turning to guidance, Mattel predicted that it would grow its sales by 2% to 3% while maintaining its profit margins at levels comparable to 2024. Management didn't provide a forecast for GAAP earnings, but said its adjusted earnings (which remember, were below GAAP earnings in Q4) will grow to between $1.66 per share and $1.72 per share.
Still, that would only be an earnings growth rate of about 4% -- better than its forecast sales growth, but far from a barn-burning pace. Even at a seemingly cheap P/E ratio of just 11.5, I'm not convinced Mattel stock is a great buy. The company pays no dividend, is growing slowly, and its net debt load of $1.9 billion is nearly one-third of its market cap.
Call me cheap if you like, but I suspect investors can find better bargains out there than Mattel stock.
