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Mattel Suffering from Earnings Declines in Key Brands

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Sep. 12 2016, Updated 4:04 p.m. ET

Price movement

Mattel (MAT) fell 5.8% to close at $31.73 per share during the first week of September 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -4.3%, -4.9%, and 21.1%, respectively, as of September 9. MAT is trading 4.8% below its 20-day moving average, 3.2% below its 50-day moving average, and 4.9% above its 200-day moving average.

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Related ETFs and peers

The ALPS Sector Dividend Dogs ETF (SDOG) invests 2.2% of its holdings in Mattel. The ETF tracks an equal-weighted index of the five highest-yielding S&P 500 securities in each sector. The YTD price movement of SDOG was 17.6% on September 9.

In comparison, the WisdomTree Dividend Ex-Financials ETF (DTN) invests 2.0% of its holdings in Mattel. The ETF tracks an index selected and weighted by dividends that exclude financial firms. The market caps of Mattel’s competitors are as follows:

  • The Walt Disney Company (DIS)—$148.3 billion
  • Hasbro (HAS)—$9.9 billion

Latest news on Mattel

In a press release on September 7, 2016, DK announced its “partnership with American Girl, a premium brand for girls and a wholly owned subsidiary of Mattel, Inc.,  to create an exclusive collection of nonfiction books for children to launch in September 2016. It added that this fall, DK will employ their hallmark approach through a series of non-fiction formats that celebrate the American Girl brand and its history since the company was founded in 1986.”

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Performance of Mattel in 2Q16

Mattel reported 2Q16 net sales of $957.3 million, a fall of 3.1% from the net sales of $988.2 million in 2Q15. Gross sales of the Mattel Girls & Boys and American Girl brands fell 8.0% and 19.1%, respectively.

Gross sales of the Fisher-Price and Construction and Arts & Crafts brands rose 2.8% and 11.6%, respectively, between 2Q15 and 2Q16. The company’s gross profit margin fell 5.4%.

Mattel’s net income and EPS (earnings per share) fell to -$19.1 million and -$0.06, respectively, in 2Q16, compared with -$11.4 million and -$0.03 in 2Q15. It reported adjusted EPS of -$0.02 in 2Q16, compared with $0.01 in 2Q15.

Mattel’s cash and cash equivalents and inventories rose 5.8% and 4.5%, respectively, between 2Q15 and 2Q16. Its current ratio and long-term debt-to-equity ratio fell to 1.7x and 0.77x, respectively, in 2Q16, compared with 2.6x and 0.81x, respectively, in 2Q15. In the next part, we’ll discuss Archer Daniels Midland (ADM).

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