Why Mattel Stock Dipped Today – The Motley Fool

What happened

A week after Mattel (NASDAQ: MAT) Stocks surged after a fourth-quarter earnings release better than expected, with the stock giving up much of those gains after Mattell's announcement of the 2019 forecast at the New Toy Fair York. The toy maker said it expects steady net sales in constant currency for the year, and that the weakness of its Thomas & Friends and American Girl brands would weigh on performance.

As a result, the stock closed the day down 18.3%.

So what

Joe Euteneuer, Mattel CFO, said at a presentation at the industry's largest annual meeting that first-quarter sales would decline to the bankruptcy of the Toys R Us bankruptcy, that sales would fall slightly in China and would suffer the effects of a strong dollar. Euteneuer also noted that Easter was turning into the second quarter, resulting in toy sales. The company said the Barbie and Hot Wheels brands would continue to grow, but the momentum would be less dynamic than last year.

In the second quarter, the company experienced an acceleration of its sales with the publication of Toy Story 4 and Jurassic Worldand said there was no significant comparison from the previous year for the second half.

With respect to costs, he stated that it would save at least $ 278 million more on expenditures, including input costs, marketing and sales costs, general and administrative costs, while continuing to implement a multi-year cost reduction program.

Lastly, the company's gross margin increased from 39.8% to 40 years and is forecasting a slightly positive adjusted operating profit, up from a loss of $ 115 million last year.

Now what

Mattel's forecast compares negatively with the consensus of analysts, which forecast revenue growth of 3.9% to $ 4.61 billion. In the end, analysts found that the company posted adjusted earnings per share of $ 0.05 after a loss of $ 0.84 in 2018. Although Mattel has not provided a earnings-per-share forecast the expected $ 190 million in interest expense reverses its modest adjustable operating income, resulting in a loss of net income.

Although the company continues to tout the potential of its intellectual property in areas such as movies, games and television shows, the numbers speak for themselves. It's not a surprise to see the stock plummet with the company's forecasts.

Jeremy Bowman has no position in any of the mentioned actions. The Motley Fool has no position in any of the actions mentioned. Motley Fool has a disclosure policy.