Research

MAT – Market expectations are for Uniform ROA to improve, but management may have concerns about their revenue, operations, and margins

October 14, 2020
  • Mattel, Inc. (MAT:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 26.4x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about their revenue, operations disruptions, and growth margin
  • Specifically, management may have concerns about the revenue impact of industry-wide delay in theatrical film releases and the entertainment shift with Minions. Furthermore, they may lack confidence in their ability to execute their e-commerce strategy and sustain their regional performance and gross sales, and in the growth potential of the toys and games industry. Additionally, they may have concerns about the sustainability of open retail outlets, growth margin headwinds, and potential plant closures. Moreover, management may lack confidence in their ability to improve revenue performance in H2 2020, balance their production levels, and maintain their point-of-sale performance. Finally, they may be overstating their ability to be flexible and results-oriented, and the capabilities of their Barbie Fashionistas segment