Mattel' (NASDAQ: mat) Stocks were a hot item after the toy company reported its first-quarter results in early May, not only because it received a double defeat in analyst estimates. As investors fear the impact of the current tariff war on U.S. business, the company's management said the right measures regarding its environmental storm capabilities.
Here are how management intends to handle this situation and why investors and analysts are happy with the company’s strategy – not to mention these quarterly figures.
Mattel’s fundamentals are heading in the right direction, with net sales up 2% year-on-year, with net sales below $827 million. Meanwhile, non-GAAP (adjusted) net loss per share narrowed to $0.03 at $0.05.
Better yet, the two order items far exceed consensus analyst estimates, with the highest line estimated at $786 million and an adjusted net loss of $0.09.
Tariffs are the center of concern for many investors today. To its credit, Mattel clearly resolved this situation. The good news is right away, not only does the tax not affect performance in the first quarter, but it won’t do so in the second quarter.
It depends on what management describes as “time of inventory flow,” which is an easy way to spend, saying the company actually ensured most of the goods needed for manufacturing this quarter.
Besides that (the tariff strike should last for so long), Mattel has proposed a series of actions to weaken the impact of the higher costs of affected commodities. It said it is generally accelerating the diversification of its supply chain, reducing its dependence on China, and "optimizing product procurement and product portfolio." Last but not least, it will strategically adjust the price if needed.
Mattel has a certain degree of flexibility here. During a conference call discussing the quarter, CEO ynon radiation Says the company's products from business partners in seven countries.
Another Nuggets for Mattel's leader decline is that China is less than 40% of global toy production. While this is still a clumsy number, it's far below what Kreiz says is 80% of the current toy industry.
Most importantly, before the tariffs were announced, Mattel had gradually moved certain lines from China to other regions.
As for its near-year future, Mattel insists on providing guidance for the whole year 2025 until its time is "Given the huge macroeconomic environment and the evolving U.S. tariff situation, there is sufficient visibility“as stated in the earnings release.
Nevertheless, the company's stock price has promoted some potential stock prices. Action characters based on popular movie video games Minecraft Crez said on the call that he performed well in the market. Jared Hess, the film's director, recently said the discussion has been discussed in the sequel and can be well positioned for Mattel.
Meanwhile, the company has signed a global licensing agreement with several prominent intellectual property holders for many years. For example, it has a long-term partner Walt Disney for Toy Story The franchise of entertainment giant Pixar Forces. like Minecraftplanned release in 2026 Toy Story 5 A large demand for Woody and gang representatives should be stimulated.
So basically, Mattel not only causes a compelling pace on the key Q1 fundamentals, but also has a clear vision of how to manage the current global economic turmoil. As some profitable licensing agreements were locked in the next few years, it looks like the company's growth is growth. Investors should of course consider loading on some Mattel, especially now.
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Eric Volkman holds a position at Walt Disney. Motley Fool has a place and recommends Walt Disney. Motley Fool has a disclosure policy.
If the tariff war continues initially published by Motley Fool, the famous toy company will be the outperformer market