Toymaker RC2 (NASDAQ:RCRC) delivered investors an early Valentine's Day gift, announcing that its 2005 profits will come in at the high end of its originally projected range of $2.40 to $2.50 a share.

The problem, before the company's actual report comes on Feb. 14, is that analysts had lapped the maker of playthings on wheels. The five market mavens tracking the stock had pegged earnings between $2.48 and $2.57 a share, with the average resting on the $2.52 stripe.

Then again, it's easy to see why Wall Street thought the company was lowballing with its fiscal targets. In the first quarter, analysts were perched at $0.21 in profits a share, while the company earned $0.37 a stub. In the second quarter, RC2's net income was $0.45 a share, a figure that humbled analysts who were banking on a $0.33-per-share showing.

The Street caught up to RC2 in the third quarter, nailing reality with a consensus estimate of $0.82 in earnings per share. Maybe that should have been a sign for analysts to slow down, but most of them deliberately ran ahead of the company's public guidance.

No matter where the income finally clocks in, it will still be an improvement over the $2 per share that RC2 earned in 2004. The company has had a pretty amazing run in recent years. Until three years ago, the company that was once known as Racing Champions Ertl was carving a pretty nondescript living as the maker of NASCAR collectibles and farm-themed toys licensed under the brand of agricultural giant John Deere (NYSE:DE). It was a pretty good life. Obviously, NASCAR is huge, and what little boy wouldn't like to take some rugged tractor toys out to the yard? However, the company's fortunes improved for the better in 2003, when it acquired Learning Curve.

The market was mostly uninterested in RC2 until then. The stock had been trading for a mere eight times trailing earnings. However, Learning Curve provided it with a few high-end lines, few of them as attractive as the pricy line of Thomas the Tank Engine licensed wooden train and track toys.

The stock has gone on to triple since the acquisition. Along the way, the company has also bought some new lines and disposed of others. The bottom line may not have grown as quickly as the share price, but the company still appears attractively priced at around 14 times last year's earnings.

Yes, there is money to be made in toys. Leading toymakers Hasbro (NYSE:HAS) and Mattel (NYSE:MAT) are well-liked in our circle of market watchers. Hasbro is a Motley Fool Stock Advisor newsletter service recommendation, while Mattel was singled out back in 2004 as a compelling value play to readers of Inside Value. Like RC2, Hasbro and Mattel also find their shares trading at reasonable earnings multiples in the teens.

It's a sector worth watching. As kids turn to pricier next-generation video game systems, some worry that traditional playthings will suffer. Then again, traditional toymakers have heard that for generations, and they're clearly not going away. So why buy toys when the shares of the toymakers are built to last infinitely longer?

Longtime Fool contributor Rick Munarriz knows the Learning Curve toys all too well, thanks to his youngest son's costly obsession. He does not own shares in any of the companies mentioned in this story. T he Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.