Core Viewpoint - Mattel, Inc. is considered one of the most undervalued stocks under $20, despite a recent price target reduction by JPMorgan following disappointing third-quarter earnings results [1][2]. Financial Performance - Mattel reported net sales of $1.74 billion for the third quarter, a decrease of 6% year-over-year, and below the expected $1.83 billion [3]. - The company's net income was $278 million, down $94 million from the same period last year, with earnings per share (EPS) reported at $0.89, missing estimates of $1.05 [3]. Analyst Insights - JPMorgan's analyst noted that the revenue miss was attributed to retailers shifting towards domestic shipping from direct imports, but expressed optimism for a strong finish to the fiscal year due to efficient inventory management and increased orders from U.S. retailers in Q4 [4]. - The analyst maintained a Neutral rating on Mattel's shares while adjusting the price target from $25 to $23 [2][4]. Company Outlook - Mattel's Chairman and CEO, Ynon Kreiz, stated that despite the challenges faced in Q3, the company's fundamentals remain strong, and there is a significant pickup in orders [5]. - The company is on track to meet its full-year guidance for 2025, indicating confidence in future performance [5].

Core Viewpoint - Mattel, Inc. has announced the pricing of a public offering of $600 million in senior notes, which will mature on November 17, 2030, with an interest rate of 5.000% [1][2]. Group 1: Offering Details - The offering consists of $600 million aggregate principal amount of senior notes due in 2030 [1]. - The notes will be senior, unsecured obligations of the company [1]. - The offering is expected to close on or about November 17, 2025, pending customary closing conditions [1]. Group 2: Use of Proceeds - The net proceeds from the offering will be used to redeem all outstanding 3.375% senior notes due 2026 and to cover related fees and expenses [2]. Group 3: Underwriters - BofA Securities, Citigroup Global Markets, Wells Fargo Securities, and Goldman Sachs are acting as joint book-running managers for the offering [3]. - Some underwriters may hold portions of the existing 2026 notes and could receive a portion of the proceeds from this offering [3]. Group 4: Regulatory Compliance - The offering was made under a shelf registration statement filed with the SEC, which became effective on October 30, 2025 [4]. - A preliminary prospectus supplement has been filed, and a final prospectus will also be filed with the SEC [4].

Core Insights - The 2025 Hot Wheels Legends Tour, presented by Mobil 1, is concluding with a focus on standout regional winners from a global contest that allows custom car builders to have their creations immortalized as Hot Wheels die-cast models [1][2] Summary by Sections Contest Overview - The contest featured 26 custom builds selected from events across 16 countries, including 11 regional winners from the U.S. and a Walmart Virtual Contest [2][6] - Three regional finals will take place in the U.S., Latin America, and Europe/Middle East, culminating in a Global Grand Finale on November 15, which will be streamed online [4][6] Regional Winners - Notable U.S. winners include: - Robert Harden from Florida with a V8-swapped 1974 Porsche 914, featuring a 427-cubic-inch stroker V8 producing over 630 horsepower [7] - Jared Pink from Atlanta with a custom 1990 Nissan 300ZX powered by a Chevy Big Block V8 [7] - Noel Santos from Charlotte, who restored a 1954 Grumman Olson Sunbeam Bread Truck with a modern 6.0-liter LS V8 engine [8] International Winners - International winners include: - Joey Ruiter from Detroit with a street-legal "Reboot Buggy" powered by a mid-mounted 6.3-liter Chevrolet V8 [10] - Jeff Kruse from Milwaukee with a 1968 Chevy Camaro featuring a custom air suspension setup [10] - Donnie Dye from Austin with a custom 1952 Buick Super Riviera, a six-time record holder at the Bonneville Salt Flats [10] Additional Highlights - The Walmart Virtual Contest winner is Joshua Woodworth from Oklahoma City, who built a customized 1946 Willys Jeep with a 5.7-liter LS engine [10] - International builds include a 2016 BMW i8 from the UAE, a 2002 Honda Civic Type R from Germany, and a 1982 BMW 3 Series from England, showcasing diverse automotive creativity [11][16]

Financial Performance - Mattel's net sales in Q3 2025 decreased by 6% to $1.74 billion, down from $1.84 billion in Q3 2024, attributed to a decrease in gross billings and an increase in sales adjustments [120][124]. - Gross billings for Q3 2025 were $1.97 billion, a decrease of 4% from $2.05 billion in Q3 2024, with a favorable currency exchange rate impact of 1% [125]. - Net income for Q3 2025 was $278.4 million, a decrease of 25% from $372.4 million in Q3 2024 [123]. - Net sales for the first nine months of 2025 were $3.58 billion, a decrease of $152.0 million, or 4%, compared to $3.73 billion in the same period of 2024 [154]. - Gross billings decreased to $4.04 billion, down $110.0 million, or 3%, from $4.15 billion in the first nine months of 2024, primarily due to lower billings in Dolls and Infant, Toddler, and Preschool categories [155]. Sales Adjustments - Sales adjustments increased to $230.8 million in Q3 2025, up from $207.2 million in Q3 2024, representing 13.3% of net sales compared to 11.2% in the prior year [128]. - Sales adjustments increased to $81.8 million in Q3 2025 from $76.0 million in Q3 2024, representing 8.4% of net sales [141]. - Sales adjustments rose to $460.3 million, up from $418.3 million, representing 12.9% of net sales in 2025 compared to 11.2% in 2024 [158]. - Sales adjustments increased to $153.1 million in the first nine months of 2025, representing 7.7% of net sales, up from 6.6% in the same period of 2024 [171]. Category Performance - The Dolls category saw a gross billings decline of 11%, primarily due to lower sales of Barbie products [126]. - Infant, Toddler, and Preschool gross billings decreased by 25%, with Fisher-Price products contributing to a 14% decline [126]. - Vehicles gross billings increased by 8%, driven by higher sales of Hot Wheels products [127]. - Action Figures, Building Sets, Games, and Other gross billings rose by 11%, largely due to increased sales of Jurassic World and Minecraft products [127]. - Dolls gross billings decreased by 11%, while Infant, Toddler, and Preschool gross billings fell by 21%, with 12% attributed to lower Fisher-Price product sales [156]. - Vehicles gross billings decreased by 1%, primarily due to lower billings of Hot Wheels products [170]. - Action Figures, Building Sets, Games, and Other gross billings increased by 4%, with a 17% increase attributed to higher billings of Action Figures products [170]. Cost and Margin Analysis - Gross margin for Q3 2025 was 50.0%, down from 53.1% in Q3 2024, impacted by foreign currency exchange rates, inflation, and higher sales adjustments [120]. - Gross margin decreased to 50.0% in Q3 2025 from 53.1% in Q3 2024, primarily due to unfavorable foreign currency exchange and cost inflation [130]. - Cost of sales decreased by 9% to $487.5 million in Q3 2025, primarily due to a decrease in product and other costs [142]. - Gross margin decreased to 50.1% from 50.9%, impacted by cost inflation and higher sales adjustments [160]. - Gross margin for the International segment decreased to 50.4% in Q3 2025 from 51.7% in Q3 2024, impacted by cost inflation and higher sales adjustments [151]. - Gross margin decreased to 49.0% in the first nine months of 2025 from 49.3% in the same period of 2024 [173]. Regional Performance - North America segment net sales decreased by 12% to $978.1 million in Q3 2025, primarily due to a decrease in gross billings [137]. - International segment net sales increased by 3% to $757.9 million in Q3 2025, driven by an increase in gross billings [145]. - Gross billings for the North America segment decreased by 11% to $1.06 billion in Q3 2025, with significant declines in Dolls and Infant, Toddler, and Preschool categories [138]. - International segment net sales increased by 4% to $1.60 billion in the first nine months of 2025, with segment operating income rising by 14% to $346.9 million [175]. - Gross billings for the International segment increased by 5% to $1.91 billion, driven by higher billings of Vehicles and Action Figures products [176]. Cash Flow and Financial Position - Mattel ended Q3 2025 with cash and equivalents of $691.9 million, down from $723.5 million at the end of Q3 2024 [120]. - Cash flows used for operating activities were $203.3 million in the first nine months of 2025, compared to $61.6 million in the same period of 2024 [195]. - Cash flows used for investing activities decreased to $97.5 million in the first nine months of 2025 from $151.7 million in the same period of 2024 [196]. - Cash flows used for financing activities increased to $426.3 million in the first nine months of 2025, up from $314.2 million in the same period of 2024, primarily due to $144.2 million of increased share repurchases [197]. - Cash and equivalents decreased by $696.0 million to $691.9 million at September 30, 2025, from $1.39 billion at December 31, 2024, mainly due to share repurchases of $412.5 million and cash flows used for operating activities of $203.3 million [199]. - Accounts receivable increased by $387.1 million to $1.39 billion at September 30, 2025, from $1.00 billion at December 31, 2024, primarily due to seasonality [200]. - Inventories rose by $324.9 million to $826.6 million at September 30, 2025, from $501.7 million at December 31, 2024, driven by seasonal inventory build [201]. - Total debt was $2.34 billion at September 30, 2025, consistent with $2.33 billion at both December 31, 2024, and September 30, 2024 [204]. - Stockholders' equity remained flat at $2.26 billion at September 30, 2025, compared to December 31, 2024, with share repurchases of $416.3 million offset by net income of $291.4 million [205]. Other Financial Metrics - Advertising and promotion expenses as a percentage of net sales increased to 6.8% in Q3 2025 from 5.7% in Q3 2024, attributed to a shift in timing of advertising programs [131]. - Other selling and administrative expenses were $370.3 million, or 21.3% of net sales, in Q3 2025, a decrease from $385.7 million, or 20.9% in Q3 2024 [132]. - Other selling and administrative expenses rose to $1.12 billion, or 31.3% of net sales, primarily due to product recalls and higher outside service costs [162]. - The OPG program aims for $200 million in targeted annual gross cost savings by 2026, with 60% benefiting cost of sales [184]. - The currency exchange rate impact reflects fluctuations that could mask underlying sales trends, with a one percent change in the U.S. dollar estimated to impact net sales by approximately 0.3% [217]. - Accounts payable and accrued liabilities increased by $44.9 million to $1.32 billion at September 30, 2025, from $1.28 billion at December 31, 2024, primarily due to an increase in accounts payable [203]. - Prepaid expenses and other current assets increased by $12.8 million to $246.9 million at September 30, 2025, from $234.1 million at December 31, 2024 [202]. - The company intends to repay or refinance $600.0 million of 2021 Senior Notes due in April 2026 prior to the scheduled maturity date [204].

Group 1 - Retailers have been destocking inventories and delaying orders with Hasbro and Mattel due to tariffs and trade uncertainty, leading to a summer slowdown, but conditions have started to improve in September and October [3][7] - Mattel expects total sales to increase between 1% and 3% over last year's $5.4 billion, with adjusted operating income anticipated between $700 million and $750 million, consistent with last year [4] - Hasbro plans to reduce its reliance on China for toy and game revenue to 30% by 2026, down from about 50% at the start of the year, while aiming for 30% of its revenue to be based in the U.S. by next year [6] Group 2 - Mattel's Q3 sales were $1.7 billion, a decline of 6% year-over-year, while Hasbro's consumer products revenue fell 7% year-over-year, with operating profit down 32% [7] - Both companies are starting to see a recovery in orders, with Mattel's CEO noting significant acceleration in orders since the beginning of October [7]

Group 1 - The 2025 China Satellite Application Conference will be held from October 25 to 27 in Beijing [3] - Chinese President Xi Jinping will visit South Korea from October 30 to November 1 at the invitation of President Yoon Suk-yeol, marking Xi's first state visit to South Korea in 11 years [5] - The U.S. stock market indices closed higher, with the Nasdaq rising 1.15% and reaching a weekly gain of 2.31% [5] Group 2 - The U.S. Consumer Price Index (CPI) for September increased by 0.3% month-on-month, with a year-on-year increase of 3% [6] - International oil prices fell, with WTI crude oil down 0.57% to $61.44 per barrel, while Brent crude oil decreased by 0.29% to $65.10 per barrel [7] - The People's Bank of China reported that the balance of RMB loans reached 270.39 trillion yuan, a year-on-year increase of 6.6% [9] Group 3 - The China Securities Regulatory Commission emphasized enhancing the resilience and risk resistance of the capital market [13] - Guangdong Province announced measures to support the high-quality development of the low-altitude economy, including financial services and support for companies to go public [12] - The China Logistics and Purchasing Federation initiated a campaign against "involution" in the warehousing industry to promote high-quality development [15] Group 4 - But Bin's overseas fund disclosed a significant increase in holdings, particularly in Alibaba and other AI-related stocks, indicating confidence in their future potential [20] - The IPO of domestic GPU manufacturer Muxi Co., Ltd. was approved, aiming to raise 3.904 billion yuan for new GPU development projects [22] - Meta is facing a lawsuit from the EU, potentially leading to fines of up to 6% of its annual revenue due to alleged failures in content moderation [24]

Core Insights - Longleaf Partners Fund reported a return of -0.33% in Q3 2025, underperforming the S&P 500's 8.12% and Russell 1000 Value's 5.33% [1] - The fund focuses on investments in real assets and brands that generate growing free cash flow (FCF) per share, with expectations of a rise in FCF multiple from ~10x to the mid-teens [1] Company Performance - Mattel, Inc. (NASDAQ:MAT) experienced a one-month return of 13.49% and a 52-week gain of 0.95%, with a market capitalization of $6.18 billion as of October 23, 2025 [2] - In Q3 2025, Mattel's net sales decreased by 6% to $1.74 billion, with a 7% decline in constant currency [4] Sales and Market Dynamics - North American sales for Mattel fell by 16% due to retailers adjusting orders amid tariff uncertainties, while international sales increased by 7% [3] - Despite lower-than-expected sales, Mattel showed positive point-of-sale sell-through, indicating healthy underlying demand for toys [3] Future Outlook - The company anticipates modest sales growth in 2025, with acceleration expected in 2026 due to new movie releases and digital games [3] - Management plans to utilize nearly all FCF for share repurchases, targeting $340 million in the second half of 2025, representing over 5% of shares outstanding [3]

Group 1: Market Overview - U.S. equities experienced a rally in Q3 2025, driven by the Federal Reserve's first rate cut of the year, strong corporate earnings, and broadening market participation [1] - The enthusiasm for AI led to significant gains in the technology sector, while small-cap stocks outperformed as capital shifted into undervalued market segments [1] - Ariel Fund achieved a return of +12.39% in Q3 2025, outperforming the Russell 2500 Value Index (+8.17%) but lagging behind the Russell 2000 Value Index (+12.60%) [1] Group 2: Company Focus - Mattel, Inc. - Mattel, Inc. (NASDAQ:MAT) reported a one-month return of 13.49% and a 52-week gain of 0.95%, with shares closing at $19.18 and a market capitalization of $6.18 billion on October 23, 2025 [2] - The company faced mixed earnings due to timing shifts in retailer orders linked to tariff uncertainties, although consumer demand remained strong [3] - Despite a slight reduction in 2025 guidance, management anticipates revenue growth and market share gains, supported by resilient point of sale, disciplined cost control, and active buybacks [3] Group 3: Financial Performance - In Q3 2025, Mattel, Inc.'s net sales decreased by 6% as reported and 7% in constant currency, totaling $1.74 billion [4] - The company’s gross margins expanded, and earnings per share (EPS) exceeded consensus expectations, indicating progress on profitability initiatives [3] - The potential for monetizing intellectual property through future media projects supports the view that Mattel's shares are undervalued [3]

Core Insights - Mattel, Inc. has announced a multi-year licensing partnership with Formula 1® to expand its Hot Wheels Formula 1® collection [1] - The updated collection will feature all 10 Formula 1® teams, including Scuderia Ferrari and Aston Martin Aramco Formula One™ Team [1] - The new lineup will showcase the official Formula 1® 2025 team liveries and driver roster, available in the Hot Wheels core [1]

Core Viewpoint - The article discusses the author's investment philosophy, which incorporates various strategies including fundamental, technical, and momentum investing, emphasizing the importance of a diversified approach to capital management [1]. Group 1: Investment Strategies - The author utilizes fundamental investing, which focuses on the intrinsic value of companies, as well as technical investing that analyzes historical price charts [1]. - Momentum investing is also mentioned, highlighting the significance of share price reactions following earnings announcements [1]. - The combination of these strategies aims to enhance the author's investment process and decision-making [1]. Group 2: Purpose of Writing - The article serves as a platform for tracking the performance of the author's investment ideas [1]. - It aims to connect with like-minded investors who share similar interests in investment strategies [1].