Mattel Swings 12.5% After Strong Q4 Earnings Beat Expectations

Mattel's stock surged 12.5% following a significant Q4 earnings beat, with EPS reaching $0.35 on sales of $1.65 billion, surpassing analyst expectations. This performance could positively affect investor sentiment.

Date: 05-02-2025

AI Rating: 7

Earnings Per Share (EPS): Mattel reported adjusted earnings per share of $0.35, which is significantly higher than the expected $0.20. This is a strong positive indicator as it showcases the company's ability to outperform analysts’ forecasts.

Revenue Growth: Sales for the fourth quarter were $1.65 billion, slightly above the expected $1.63 billion, demonstrating a modest growth. Year-over-year, sales grew by 2%, which may indicate stability, though annual sales showed a slight decline of 1% to $5.4 billion.

Profit Margins: The gross profit margin for Q4 increased by 190 basis points to 50.7%. Additionally, for the full year, Mattel improved its gross margin by 330 basis points to 50.8%. This enhancement in margins may indicate better cost management and pricing power.

Net Income: For the full year, GAAP earnings were $1.58 per share, a significant improvement from $0.60 in 2023. While this is a positive trend, it is crucial to note that Mattel's growth is perceived to be slow.

Future Guidance: Mattel expects sales to grow by 2% to 3% and has set a target of adjusted earnings between $1.66 and $1.72 per share, reflecting an expected growth rate of about 4%. While this is better than its sales growth forecast, some investors might find it insufficient for a long-term investment.

Although there are several positive indicators, such as increased EPS and profit margins, the lack of dividend and slow growth rate might make investors cautious. The company's prediction for achieving stable profits alongside a relatively low P/E ratio might not convince investors of its potential in a competitive market.

Stocks: MAT