Shareholders of JAKKS Pacific (NASDAQ:JAKK) are having a glorious time watching their stock today. The shares are seeing an incredible run following the company's third-quarter earnings report. So what were these high-flying numbers?

For the quarter, net sales increased 27% to $295.8 million, while operating income jumped 23% to $58.2 million. Net income advanced 24% to $40.5 million, or $1.26 per diluted share.

Year-to-date, the numbers were a bit more tame. Net sales increased 6% to $527.1 million. Operating income actually dropped 8% to $69.4 million. Net income also declined, losing almost 10%, to come in at $49.2 million, or $1.57 per diluted share.

While the nine-month figures may have been disheartening, investors are focusing instead on the strong third-quarter performance. Why? Because with such a robust earnings picture for the timeframe ending Sept. 30, Wall Street figures that JAKKS is in a stellar position ahead of the holiday season. The company is managing its product lines favorably right now, and it should be able to capitalize on the increased revenue flow it's bound to see from gift-buyers across the nation, even in the shadows of big guns Hasbro (NYSE:HAS) and Mattel (NYSE:MAT).

As I mentioned in a piece on JAKKS' previous quarter, there's a lot to like about the company in terms of decent cash flows and some valuable properties. In fact, next month a video game will be released by a joint venture between JAKKS and THQ (NASDAQ:THQI). WWE SmackDown vs. Raw 2007, based on a license with World Wrestling Entertainment (NYSE:WWE), will be available for Sony's PlayStation 2 and PSP systems and Microsoft's Xbox 360. The company is currently sporting a loss from the joint venture, but I'd imagine that the new popular franchise will help drive it toward a profit. But as JAKKS shareholders know, there's still the specter of litigation haunting this deal. Judging from the stock performance today, investors don't seem to be too concerned by it -- not yet, anyway.

Another catalyst that might benefit the company this holiday season is its recent hookup with MGA Entertainment and its famously hip Bratz line of dolls. One of JAKKS' strengths is its ability to market arts-and-crafts items -- since this arrangement will see products in that category leveraging the value of the Bratz brand, the company's profits should see a boost.

JAKKS is sticking to its guidance for the year of $2.32 in diluted earnings per share. When I wrote about the company last time, I stated that it might be a great value, given its PEG ratio of 0.77. Obviously, with a 22% run-up in the shares (at the time of this writing), the stock doesn't represent that value proposition anymore. Nevertheless, I conservatively calculate the PEG ratio to be just more than 1 at the moment (assuming, as I did last time, a conservative 9% growth rate going forward, because of consumers' fickleness in the toy industry). With the holiday season just getting underway, I think JAKKS remains a valid idea, although investors might want to wait for a pullback after this recent run-up.

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Fool contributor Steven Mallas owns none of the companies mentioned. The Fool has a disclosure policy .