A month has gone by since the last earnings report for Mattel (MAT) . Shares have added about 1.5% in that time frame, outperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Mattel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.Mattel Q3 Earnings and Reve ...

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 Insights - Toys are transitioning from mere childhood amusements to legitimate investment assets, although they remain unpredictable [1] - The rise in toy collecting is driven by Gen X and millennials, who seek nostalgia as a response to economic uncertainties [2][3] Investment Trends - Online marketplaces like eBay, Etsy, and Whatnot have legitimized the resale market for toys, making them more accessible for investment [1] - Emotional connections to childhood drive demand for collectible toys among investors in these age groups [3] Collectible Toy Valuations - Pokémon collectibles can have significant value, with a full set of first-edition holofoils from 1995 worth approximately $8,500, and misprinted cards fetching around $5,000 [4] - Hot Wheels from the 1960s and 1970s can also command high prices, with specific models like the 1969 Pink Rear-Loading VW Bus Beach Bomb valued at $175,000 [5][6]

Core Insights - Netflix has solidified its position in the media landscape, moving beyond being a simple streaming service to becoming a significant media and entertainment entity [3][10][12] Group 1: KPop Demon Hunters Success - The animated film "KPop Demon Hunters" has achieved 325 million views within its first three months, marking it as Netflix's most successful film to date [1][6] - The film's success has led to licensing agreements with toy manufacturers Mattel and Hasbro, indicating strong revenue potential from merchandise [2][6] - The film features three Korean pop stars who combat supernatural threats, appealing to a younger audience and supporting merchandise sales [4][5] Group 2: Licensing and Merchandise - Netflix has a history of monetizing its intellectual property, as seen with "Stranger Things" and "Squid Game," which also generated related merchandise [7][9] - The company is not only leveraging its own content but also collaborating with established brands like Mattel and Hasbro to promote their products through its shows [8][9] Group 3: Market Position and Consumer Engagement - Netflix is increasingly viewed as a lifestyle brand, with consumers engaging with its content beyond just streaming, unlike competitors such as HBO Max and Peacock [12][14] - Recent data shows that 19% of U.S. TV watchers turn to Netflix first, surpassing other streaming platforms and indicating strong consumer loyalty [13][14] Group 4: Financial Outlook - Netflix shares are currently valued at over 40 times projected earnings for the year, reflecting a premium price for a leading name in the streaming industry [15][16] - The company is expected to see advertising-driven revenue growth of over 15% this year and nearly 13% next year, suggesting a robust financial outlook [16]

Core Insights - Mattel, Inc. reported lower-than-expected third-quarter 2025 results, with both earnings and revenues missing estimates, leading to a 6.8% decline in share price during after-hours trading [1][5] Financial Performance - Adjusted EPS for Q3 was 89 cents, missing the Zacks Consensus Estimate of $1.05, and down from $1.14 in the prior-year quarter [5] - Net sales were $1.74 billion, missing the consensus estimate of $1.81 billion by 4.1%, and declined 6% year over year [5] - North America segment net sales decreased by 12% year over year, while the International segment saw a 3% increase [6] Segment Performance - Gross billings in the North America segment fell 11% year over year, attributed to declines in Dolls, Infant, Toddler and Preschool, and vehicles [6] - International segment gross billings increased by 5% year over year, driven by growth in the EMEA and Asia Pacific regions [7] - Barbie gross billings fell by 17% year over year, while Hot Wheels saw an 8% increase [8][9] Operational Insights - Adjusted gross margin was 50.2%, down 290 basis points year over year, due to foreign exchange impacts, inflation, and increased tariff costs [11] - Adjusted EBITDA for the quarter was $466.1 million, compared to $584.4 million in the prior-year quarter [11] Balance Sheet Overview - As of September 30, 2025, cash and cash equivalents were $691.9 million, down from $723.5 million a year earlier [12] - Total inventories increased to $826.6 million from $737.2 million year over year, while long-term debt decreased to $1.73 billion from $2.33 billion [12] Future Outlook - Mattel expects net sales growth of 1% to 3% for 2025, with adjusted EPS projected between $1.54 and $1.66 [13] - The company anticipates an adjusted gross margin of approximately 50%, down from 50.9% reported in fiscal 2024 [13]

Core Insights - Mattel's third-quarter results indicate a decline in sales and margins, with rising inventories as the company approaches the holiday season [1][3][5] Sales Performance - Net sales for Mattel reached $1.74 billion, reflecting a 6% decrease compared to the previous year [3] - Adjusted gross margins fell by nearly 3 percentage points to 50.2%, slightly above the company's target of 50%+ [3] - Adjusted operating income decreased by over $100 million, and earnings per share dropped by 22% [3] Category Performance - Hot Wheels sales increased by 6%, and action figures rose by 9%, driven by franchises like Minecraft and Masters of the Universe [4] - However, sales of dolls, Mattel's largest category, declined by 12%, with Barbie experiencing a significant drop [4] - Fisher-Price and preschool lines saw a substantial decline of 26% [4] Retailer Ordering Patterns - CEO Ynon Kreiz attributed the sales drop to "industry-wide shifts in retailer ordering patterns," indicating that major retailers like Walmart and Target are ordering more cautiously and later than usual [5] - Retailers are delaying large orders from factories, which impacts Mattel's third-quarter sales [5] Inventory and Revenue Impact - The cautious ordering pattern has resulted in Mattel carrying $827 million in inventory, an increase from $737 million a year ago [6] - This shift pushes revenue into the fourth quarter, creating additional risk for the company [6] Tariff Exposure - Mattel's inventory is significantly sourced from China, which is subject to various tariffs, complicating the company's cost structure [8] - The company plans to raise prices "where necessary" and accelerate manufacturing shifts to other Asian countries to mitigate tariff exposure [8]

Financial Data and Key Metrics Changes - Net sales decreased by 6% as reported and 7% in constant currency to $1.74 billion [18] - Adjusted gross margin decreased by 290 basis points to 50.2% [18] - Adjusted operating income decreased by $117 million to $387 million [18] - Adjusted earnings per share decreased by $0.25 to $0.89 [18] - Total company gross billings decreased by 5% in constant currency [18] Business Line Data and Key Metrics Changes - Dolls category declined by 12%, primarily due to Barbie and Polly Pocket, partially offset by growth in Wicked, Monster High, and American Girl [19] - Vehicles category grew by 6%, with Hot Wheels on track for an eighth consecutive record year [19] - Infant Toddler and Preschool (ITPS) declined by 26% due to declines in Fisher Price and preschool entertainment [20] - Challenger categories collectively grew by 9%, driven by action figures [20] - UNO maintained its position as the number one card game globally, growing for the ninth consecutive quarter [20] Market Data and Key Metrics Changes - North America gross billings declined by 10% due to shifts in retailer ordering patterns [21] - EMEA region grew by 3% and Asia Pacific by 11%, while Latin America declined by 4% [21] - The toy industry grew high single digits in the third quarter, reflecting momentum heading into the holiday season [13] Company Strategy and Development Direction - The company is advancing its strategy to grow its IP-driven toy business and expand its entertainment offerings [9] - A new brand-centric organizational structure has been implemented to enhance global brand management capabilities [9] - The company is focusing on scaling digital games and has announced several licensed games for console and PC [13] - Strategic collaborations with OpenAI and Netflix are being pursued to enhance product offerings and market reach [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that while the U.S. business faced challenges, consumer demand for products grew in every region [16] - The company expects a strong holiday season and is reiterating its full-year guidance for 2025 [9][28] - Management expressed confidence in the fundamentals of the business and the ability to navigate current trade dynamics [17] Other Important Information - The company repurchased $2 million of shares in the third quarter, totaling $412 million for the year, with a target of $600 million for the full year [7][23] - Retail inventories are modestly lower compared to the prior year, positioning the company well for the holiday season [24][29] - The company achieved $23 million in savings in the third quarter as part of its cost optimization program [27] Q&A Session Summary Question: Can you quantify POS in the third quarter? - Management confirmed that POS increased in all regions, including the U.S., and generally outperformed gross billings, indicating healthy consumer demand [33] Question: What is driving the retailer order acceleration? - The shift from direct import to domestic shipping has led retailers to accelerate orders in response to increasing POS, preparing for expected consumer demand [40][42] Question: What are the expectations for Barbie in Q4? - Management expects improving trends for Barbie in Q4 driven by cultural relevance, packaging innovation, and expanding adult demand [71] Question: How are tariffs impacting gross margin? - Tariff-related costs, foreign exchange, and inflation have impacted gross margin, but the full effects are expected to be seen more in Q4 [37] Question: What is the outlook for international business in Q4? - Current trends in international markets are expected to persist, with strong consumer demand and disciplined execution across markets [51] Question: What is the expected impact of the Wicked movie on content support? - The Wicked movie is anticipated to significantly contribute to the fourth quarter, alongside other major releases planned for next year [60] Question: How does the company view pricing strategies moving forward? - The company aims to keep prices low for consumers and has no plans for additional price increases this year, focusing on efficiencies to mitigate costs [85]

Core Viewpoint - Mattel's third-quarter results fell short of analysts' expectations, primarily due to ongoing global tariffs impacting sales in North America, leading to a 4% drop in shares after hours [1][3]. Financial Performance - For the quarter ended September 30, net income was reported at $278 million, or 88 cents per share, down from $372 million, or $1.09 per share, a year earlier [2]. - Adjusted earnings per share were 89 cents, compared to the expected $1.07 [8]. - Net sales decreased by 6% to $1.74 billion, missing Wall Street's expectations of $1.83 billion [3][8]. Sales Breakdown - North American sales fell by 12%, with the most significant declines in the infant, toddler, and preschool categories [5]. - Global sales for Barbie decreased by 17%, and Fisher-Price sales dropped by 19%, while Hot Wheels sales increased by 8% [5]. Future Guidance - The company provided full-year guidance, projecting net sales growth between 1% and 3% and earnings per share between $1.54 and $1.66 [4]. - CEO Ynon Kreiz noted that orders from U.S. retailers have significantly accelerated since the beginning of the fourth quarter [4]. Strategic Initiatives - Mattel is focusing on expanding its entertainment offerings and leveraging new technology, including a partnership with Hasbro and Netflix to launch products tied to the movie "KPop Demon Hunters" [6][7].

Financial Performance - Net Sales decreased by 6% to $1736 million[25], with a 7% decrease in constant currency[25] - Adjusted Gross Margin decreased by 290 bps to 502%[25] - Adjusted Operating Income decreased by $117 million to $387 million[25] - Adjusted EPS decreased by $025 to $089[25] Category Performance - Dolls category decreased by 12%, while Vehicles increased by 6%[29] - Infant, Toddler, and Preschool category declined by 26%, while Challenger category increased by 9%[29] Regional Performance - North America Gross Billings decreased by 10% in constant currency[33] - EMEA Gross Billings increased by 3% in constant currency[33] - Latin America Gross Billings decreased by 4% in constant currency[33] - Asia Pacific Gross Billings increased by 11% in constant currency[33] Cash Flow and Balance Sheet - Year-to-date Free Cash Flow was negative $328 million[46] - Trailing Twelve Months (TTM) Free Cash Flow was $488 million[46] - $202 million of shares were repurchased in Q3, bringing the year-to-date total to $412 million[13, 47]

Core Insights - Mattel, Inc. (MAT) is set to report its third-quarter 2025 results on October 21, with previous earnings exceeding estimates by 18.8% while revenues fell short by 3.8% [1] - The Zacks Consensus Estimate for Q3 earnings per share (EPS) is $1.05, reflecting a 7.9% decline from $1.14 in the same quarter last year, while revenues are projected at approximately $1.81 billion, down 1.9% year over year [2] Group 1: Performance Expectations - Mattel's Q3 performance is anticipated to be impacted by global trade dynamics, shifts in retailer ordering patterns, and uncertainty surrounding tariffs, which may limit growth potential [3] - The company has revised its full-year net sales guidance to a growth range of 1% to 3% in constant currency, a broader range than the previous estimate of 2% to 3%, due to increased market volatility and macroeconomic challenges [4] Group 2: Strategic Initiatives and Brand Strength - Despite challenges, Mattel is expected to benefit from strong franchise and licensing partnerships, robust e-commerce sales, and brand strength in action figures, vehicles, and games [5] - Key brands like Hot Wheels and UNO are likely to enhance shelf presence and consumer engagement, while the Girls category is projected to rebound through upcoming innovations and strategic partnerships [6] Group 3: Earnings Prediction Model - The current model does not predict an earnings beat for Mattel, as the company has an Earnings ESP of -0.19% and a Zacks Rank of 3 (Hold) [7][8]