馃獑 MATTEL INC: ANALYSIS 馃獑
Mattel, Inc., [MAT] is a children's and family entertainment company, designs and produces toys and consumer products worldwide. The company operates through North America, International, and American Girl segments. It offers dolls and accessories, as well as content, gaming, and lifestyle products for children under the Barbie, Monster High, American Girl, Disney Princess and Frozen, and Polly Pocket brands; dolls and books under the American Girl brand name; die-cast vehicles, tracks, playsets, and accessories for kids of all ages, and collectors under the Hot Wheels, Monster Trucks, Matchbox, CARS, and Mario Kart brand names; and infant, toddler, and preschool products comprising content, toys, live events, and other lifestyle products under the Fisher-Price and Thomas & Friends, and Power wheels brands. The company also provides action figures, building sets, and games under the Masters of the Universe, MEGA, UNO, Lightyear, Jurassic World, WWE, and Star Wars brands; and licensor partner brands, including Disney, Pixar, Microsoft, NBCUniversal, and WWE.
Based on a sample of the last year [2Q/23 TTM], its average margins have been:
- Gross margin: ± 46%
- Operating margin: ± 12%
- EBITDA margin: ± 14%
- Net margin: ± 6%
The pros: Strong brand portfolio, diversified product portfolio and
global reach (it has operations in over 40 countries. This allows the company to tap into growing markets around the world).
The cons: Competition (it faces competition from other toy companies, such as Hasbro and Lego), changing consumer preferences, geopolitical risks (such as trade wars and economic sanctions), rising costs and debt load.
Based on the last report, their normalized EPS was ± $0.63 USD and its last average ROIC [TTM] was ± 12.81%. If an average PER 25 is set as a benchmark, the potential forward spread target could be:
- Optimistic: ± $18 USD
- Neutral: ± $15.9 USD
- Negative: ± $13.9 USD
At least, an EPS of $0.82 USD is required for the next quarter, to keep the metrics.
In other hand, if an average EV/EBITDA 15 is set, an EBITDA increases of 0%, a Net Debt increases of 0% and Shares Outstanding increases of 0%, the potencial forward fair price target could be ± $20 USD.
Finally, according to its current P/S ration, a possible spread might be at:
- P/S 1: ± $14.2 USD
- P/S 3: ± $42.8 USD
The best analysis is yours!
J. Joel Padilla
Copyright: Joel Padilla 2023
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