Toy Product Actions and Content Creator Mattel, Inc. (NYSE: MAT) the stock is finally breaking out after a lag of several years. The iconic toy entertainment company has strengthened its position with various big entertainment brands in addition to its own evergreen IPs like Barbie and Hot Wheels to position itself for continued growth. Its fourth-quarter 2021 earnings beat both revenue and net income despite supply chain and logistics disruptions. The company has raised its forecast for the full year 2022 and has boldly set its targets for 2023. The company is running on all cylinders both as a game of lockdown and reopening as it has also diversified into non-fungible tokens (NFTs). Cautious investors looking for exposure in the toys segment can watch for opportunistic pullbacks in Mattel shares.
Publication of results for the fourth quarter of fiscal 2021
On February 9, 2022, Mattel released its fiscal fourth quarter 2021 results for the quarter ending December 2021. The company reported earnings per share (EPS) of $0.53, beating analyst estimates for a profit of $0.33, from $0.22. Revenue rose 10.4% year-over-year (YoY) to $1.79 billion, beating analyst estimates of $1.66 billion. Net sales for the full year 2021 increased 19% year-on-year to $5.46 billion as gross margins fell (-80) basis points to 48.1%. Operations generated cash flow of $485 million and free cash flow of $334 million, up $167 million. Mattel CEO Ynon Kreiz commented, “Matel’s results for the quarter and full year were well above expectations, capping off another outstanding performance for the company. We have made significant progress in our transformation strategy over the past few years, and our turnaround is now complete. We are in growth mode and believe we are well positioned to build on our momentum, with guidance for 2022 exceeding previous targets and an even stronger outlook for 2023.”
Indicative estimates increased
Mattel raised its guidance for FY2022 EPS to a range of $1.42 to $1.48 on revenue growth of 8% to 10% or $5.89 billion to $6 billion compared to $5.52 billion according to consensus analyst estimates. The company expects net sales to grow in single digits and Adjusted EPS above $1.90 as targets to achieve in 2023.
Takeaways from the conference call
CEO Kreiz detailed how the company overcame major global supply chain disruptions to ensure consumer demand was met for the holiday season, resulting in a 10% increase in net sales and a sixth consecutive quarter of year-on-year growth. Mattel outpaced the industry to gain global market share for the second consecutive year. In the fourth quarter, Mattel was the No. 1 manufacturer in three of the world’s seven largest properties, which also led to six consecutive quarters of market share growth. He commented that retail sales are returning to a more normalized and balanced omnichannel climate as e-commerce has stabilized, growing 2% for the quarter and 6% for 2021. He noted, “Our products have resonated with consumers at levels we haven’t seen in years. . We have also been very successful in making Mattel a partner of choice for major entertainment companies and see this as another growth driver. In addition to our own IP, we now have a tremendous array of evergreen properties from Microsoft, Nickelodeon, Nintendo, Universal, Warner Brothers, WWE, as well as Disney. Mattel has signed a multi-year global licensing agreement with Disney for its Frozen, Disney Princess and Little Mermaid properties, with a live-action film in the works for the latter. Gross doll billings increased 21% for the year. The Company also plans to drive growth in its Thomas and Fisher-Price product lines. He concluded: “The company has made significant progress over the past few years on our transformation strategy. Our turnaround is complete. We believe we are well positioned to build on our momentum and are excited to be heading for even higher growth in 2022 and higher goals in 2023.”
MAT Opportunistic Entry Levels
Using rifle charts over weekly and daily time frames provides an accurate view of the landscape for MAT stock. Rifles Weekly Chart Attempts to Break Above $25.17 Fibonacci level (fib). The weekly uptrend has rising 5-period moving average (MA) support at $22.39 as it tests the upper weekly Bollinger Bands (BB) at $25.28. The weekly 15-period MA support is at $21.94 followed by the weekly 50-period MA at $21.01. The weekly stochastic is trying to climb back to the 60 band. The daily chart of the rifle has been bullish as the 5-period MA continues to rise to $24.90, followed by the 15-period MA at $22.83 . The daily long market structure low (MSL) was triggered above $21.86. The daily Stochastic is attempting a mini-pup high at 90 bands that may reduce stocks to the daily upper BBs at $27.13. Prudent investors can watch for opportunistic pullback levels at the $23.35 fib level, $22.27 fib, $21.09 200-period daily MA/fib, $19.41 fib and the $18.41 level fib. The upward trajectories range from the $29.97 fib to the $35.30 fib level.