Candy and trading-card company Topps (NASDAQ:TOPP) has seen its stock rise by as much as 30% since bottoming out several weeks ago. Don't get too excited, though -- it's still at 1989 levels. And it may be topped out in the short term, given that its first-quarter results point toward weakness from its sports trading cards.
Sales across the board were less than impressive. Revenues from its Confectionary division remained flat at $44 million -- a 0.4% decline compared with a year ago. The company did highlight strength from its Juicy Drop Pop, but apparently kids didn't chew enough Bazooka bubble gum to push its sales into positive territory.
Topps' Entertainment Products division saw much greater weakness, with revenues declining 20.6% year over year to $34.8 million. Topps pointed to its sports trading cards as one area that continues shoot air balls. Star Wars and World Wide Wrestling products, though, were two areas in which the company displayed some strength.
The company's margins could have used more of the Force, too: Gross margins tightened to 35% from last year's level of 38.4%. The result is an operating income of $397,000, well off the $5.6 million Topps earned a year ago.
Another round of subpar performance is likely to offer little incentive to move this stock out of the $10 range that it has been stuck in for years. In comparison, the historical performances of stocks such as Wrigley (NYSE:WWY) and Hershey (NYSE:HSY), and even Tootsie Roll (NYSE:TR) for that matter, have looked like a big swat from a Louisville slugger. Even competitors in entertainment products, including Mattel (NYSE:MAT) and Hasbro (NYSE:HAS), have fared better for long-term investors.
So has Topps just been sitting around and blowing Big League Chew bubbles in the dugout? Hardly. The non-sports publishing products like Star Wars, as mentioned, are doing well, and plans to roll out some new Bazooka products give some reason for optimism.
An enterprise value of $340.3 million, with $92.9 million in cash and no long-term debt, creates a reasonable a price for a marquee name like Topps. But its stock may remain topped out until the company can spur growth by shuffling up its sports cards.
To read more on the competition, check out these articles:
- Hershey sweetens the Magnificent Mile.
- Hershey's first-quarter results were pretty sweet, too.
- Wrigley is as rock-solid as they come.
- Wrigley's dividend is nice to chew on as well.
Mattel is a selection of the Motley Fool Inside Value newsletter, and Hasbro is a Motley Fool Stock Advisor pick.
Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.
