Should you buy Mattel Stocks with the hype of the Barbie Movie?
This article will help you gauge a more logical view of Mattel before investing in its stocks.
What do accountants think of Mattel?
Balance Sheet:
Total Current Assets / Total current Liabilities = Answer should be above 1%, meaning the company can pay off its short-term debt immediately. (All numbers in thousands)
$2,729,000/ $1,187,700 = 2.3%
Income Statement:
(Operating income / Total revenue) x 100 = Should be above 15%. This tells you the company’s net profit margin. (All numbers in thousands)
($675,515/$5,434,687) x 100 = 12.4%
Cashflow:
(All numbers in thousands)
29/06/12019 $181,000
29/06/2020 $289,000
29/06/2021 $485,000
29/06/2022 $443,000
TTM $256,339
Reasons for rises and falls
What separates Mattel from their competition:
Iconic and Diverse Brand Portfolio: Mattel possesses a rich and diverse portfolio of iconic brands that have captured the imagination of generations of children and families. Brands like Barbie, Hot Wheels, Fisher-Price, and American Girl hold strong market positions and enjoy widespread recognition, giving Mattel a competitive edge.
Focus on Innovation: Mattel strongly emphasises innovation in toy design and development. The company continually introduces new and creative products that align with evolving consumer preferences and technological trends. This commitment to innovation enables Mattel to remain relevant and engaging to its target audience.
Strong Global Presence: Mattel’s vast international footprint reaches markets worldwide. Its global distribution network allows the company to cater to diverse cultural and regional preferences, giving it a competitive advantage in penetrating various markets.
Strategic Licensing and Partnerships: Mattel actively engages in strategic licensing and partnerships to expand its brand reach. Collaborations with major entertainment studios, media companies, and popular franchises enable the company to create toys and content based on beloved characters and intellectual properties, attracting a broader audience.
Commitment to Social and Environmental Responsibility: Mattel strongly emphasises social and environmental responsibility. The company actively engages in sustainable practices, ethical sourcing, and diversity and inclusion efforts. This commitment resonates with modern consumers, particularly parents who seek products aligned with their values.
Strong Entertainment Content Strategy: Mattel’s foray into the entertainment content industry has been successful. By producing animated TV shows, movies, and digital content based on its popular toy brands, the company extends the reach and engagement of its products beyond physical play.
Long-standing Experience: With a history spanning several decades, Mattel has amassed invaluable experience in the toy industry. This experience has allowed the company to navigate various market challenges and adapt to changing consumer trends effectively.
Investment in Play Experiences: Mattel focuses on creating meaningful play experiences for children. By integrating technology, interactivity, and educational elements into its products, the company provides toys that foster learning and imaginative play, setting it apart from competitors.
Strong Leadership Team: The company’s leadership team, including the CEO and executives, plays a vital role in shaping Mattel’s strategic direction and fostering a culture of innovation and creativity.
Would you work at Mattel?
Is the Leadership Team to Standard?
The leadership team at Mattel, under the guidance of Chairman and CEO Ynon Kreiz, has implemented several initiatives that positively impact the company’s stock price. Notably, they have diversified their revenue streams by expanding into the film industry through Mattel Films. With 14 live-action motion pictures in active development, including the highly anticipated “Barbie” movie in collaboration with Warner Bros. Pictures, Mattel is poised to generate additional income beyond traditional toy sales, making it an attractive prospect for investors seeking diverse growth avenues. Moreover, Mattel’s commitment to Environmental, Social, and Governance (ESG) initiatives has garnered investor appreciation. The company’s Citizenship Report showcases its sustainable and responsible practices, appealing to socially responsible investors who prioritize companies with strong ESG policies. This positive perception can increase demand for Mattel’s stock as more investors seek companies aligning with their values. In addition, Mattel’s Chief Legal Officer, Jonathan Anschell, plays a critical role in managing legal matters and compliance. His expertise ensures that the company effectively operates risks and adheres to relevant regulations. Investors value strong legal governance as it reduces the likelihood of legal disputes and non-compliance issues that tarnish a company’s reputation and financial performance.
Under President and COO Richard Dickson’s leadership, Mattel has achieved notable success with its iconic brands, Barbie and Hot Wheels. The development and launch of the Mattel Playbook, a brand-building approach, have driven the turnaround and growth of these brands. Barbie, Hot Wheels, and Fisher-Price have emerged as top properties globally, as per The NPD Group*. Investors appreciate the strong market positions of these brands, which translate into stable and growing revenues, instilling confidence in the company’s financial performance. Lastly, Robbie Brenner, Executive Producer at Mattel Films, brings an impressive track record in producing critically acclaimed films. Her involvement in the film projects adds credibility to Mattel’s venture into the film industry. Successful movie releases can enhance Mattel’s reputation and brand image, potentially attracting positive media attention and consumer interest, factors that positively influence investor sentiment.
In conclusion, Mattel’s leadership team has strategically positioned the company for growth and success, diversifying revenue streams, adhering to ESG initiatives, managing legal matters effectively, and driving the success of iconic brands. These positive attributes contribute to investor confidence and interest in Mattel’s stock, potentially leading to an upward trajectory in the stock price. However, the stock price is subject to various factors, including overall market conditions and financial performance, which also influence its value. The workplace rating and data provided for Mattel can have significant implications for the company’s stock price. With an overall rating of 3.9/5 on Glassdoor.com, the positive sentiment among employees suggests that Mattel is fostering a healthy and supportive work environment. This can be a positive signal for investors, as a satisfied and engaged workforce often translates into higher productivity and better performance.
Risks of Investing in Mattel:
Revenue Dependence: Mattel’s revenue heavily relies on the success of its key brands, such as Barbie and Hot Wheels. If any of these flagship brands face a decline in popularity or encounter challenges in the market, it could significantly impact the company’s financial performance.
Impact of Licensing and Partnerships: While licensing and partnerships can provide growth opportunities, they also come with risks. Mattel’s success in leveraging partnerships with entertainment studios or media companies may depend on the performance of associated franchises or the success of related media content.
Supply Chain and Manufacturing Risks: As a manufacturer of physical toys, Mattel is exposed to potential supply chain disruptions, raw material shortages, and manufacturing challenges. Any disruptions in production or distribution could impact the company’s ability to meet demand and affect its financial results.
Foreign Exchange and International Exposure: Mattel operates globally, and most of its revenue is derived from international markets. Fluctuations in foreign exchange rates, geopolitical tensions, and changes in trade policies can introduce currency and global market risks.
Impact of Technology: The growing prominence of digital entertainment and online gaming may pose challenges for traditional toy manufacturers like Mattel. Adapting to technological shifts and successfully integrating digital components into products will be crucial for sustained growth.
Benefits of investing in Mattel:
Strong Brand Portfolio: Mattel owns a diverse and iconic brand portfolio that includes globally recognized names such as Barbie, Hot Wheels, Fisher-Price, and American Girl. These brands have a long-standing history and loyal customer base, providing the company a competitive advantage in the toy and entertainment industry.
Market Leadership: Mattel holds a significant market share as a leading global toy company. Its established position allows the company to leverage economies of scale, access distribution channels, and negotiate favourable partnerships and licensing agreements.
Potential for Revenue Growth: Mattel’s strong brand recognition and continuous innovation efforts offer the potential for revenue growth. The company’s ability to introduce new and appealing products, expand into emerging markets, and leverage strategic partnerships can drive sales and improve financial performance.
Entertainment Content Strategy: Mattel’s expansion into the entertainment content industry through animated TV shows, movies, and digital media extends its brand reach beyond physical toys. This content strategy can increase engagement with its products and open new revenue streams.
Diversification Opportunities: As Mattel diversifies its product offerings and expands into digital gaming and interactive experiences, it may tap into new markets and cater to changing consumer preferences. Diversification can help the company reduce risks associated with over-reliance on a specific product or market segment.
Potential Turnaround: With a focus on turnaround and growth strategies under its leadership, Mattel aims to improve its financial performance and operational efficiency. Successful execution of these strategies could lead to increased investor confidence and potential stock price appreciation.
Shareholder Value Creation: A well-managed and profitable company can create value for its shareholders over time. If Mattel achieves its strategic objectives and improves profitability, it may lead to positive stock performance and potential capital appreciation.
Disclaimer:
The opinions expressed in this document are those of the author. The author is not an accountant or financial advisor and information contained in this document is not a substitute for financial advice from a professional. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. All information and content in this document are for general informational purposes only.
