There is more to the toy maker industry than meets the eye.
However, Hasbro opened higher this morning after its report. Mattel got pounded after it posted its financials on Friday.
What's going on? Well, it's all about managing expectations.
Hasbro's report may seem unimpressive at first. Revenue and net income only climbed 3% ahead of last year. It is Hasbro's penchant for buying back shares -- having gobbled down 15.6 million shares so far this year -- that propped earnings up by 10% on a per-share basis to $1.09. The key point here is that Wall Street was banking on a profit of only $1.04 a share for the period. It's the sixth quarter in a row that finds Hasbro beating analyst profit targets.
Hasbro's performance is also pitted against last summer, when both its Transformers and G.I. Joe franchises had huge summer theatrical releases. Movies result in both healthy licensing revenue and an uptick in interest in themed toys.
Mattel didn't have to worry about that kind of shadow. It should have done a lot better this time around.
Shares of Mattel fell 6% on Friday, after the world's largest toy maker posted disappointing quarterly results. Sure, it sold plenty of licensed playthings -- cashing in on the success of Disney's
The recent Fisher-Price voluntary recall isn't going to help as we head into the holiday shopping season, either. News-savvy Santas may decide to sidestep the brand this year. For those scoring at home, it should be pointed out that Hasbro's preschool business grew during the same three months.
Smaller toy makers have yet to report, though LeapFrog
Then again, it's not as if we should be pigeonholing those companies either. Hasbro and Mattel show us that sometimes you have to dig deeper to get the clearer picture of what's really going on in the toy box.
Would you invest in Hasbro or Mattel today? Share your perspective in the comment box below.
Walt Disney is a Motley Fool Inside Value selection. Walt Disney and Hasbro are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.
Longtime Fool contributor Rick Munarriz is a kid at heart with the closet full of games to prove it. He does not own shares in any of the companies in this story, except for Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy that is harmful only if it's not swallowed.
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