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Factors Setting the Tone for Mattel's (MAT) Q3 Earnings

Zacks Equity Research
·3 min read

Mattel, Inc. MAT is scheduled to report third-quarter 2020 results on Oct 22, after the closing bell. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 31.6%.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter earnings is pegged at 38 cents, indicating an improvement of 46.2% from the prior-year quarter. Over the past seven days, the estimates have remained stable. The consensus mark for revenues stands at $1.46 billion, suggesting a decline of 1.3% from prior-year quarter.

Factors to Note

The company’s third-quarter results are likely to reflect dismal performance of its Power Brands. Moreover, soft worldwide gross sales for Dolls, Infant, Toddler and Preschool and Action Figures, Building Sets and Games are likely to have weighed on the third-quarter performance.

The Zacks Consensus Estimate for revenues for Power Brands Barbie, Fisher-Price and Thomas & Friends Brand, and Hot Wheels are likely to witness declines of 3.1%, 3.8% and 7.2% year over year to $413 million, $381 million and $293 million, respectively. Moreover, softness in North America sales might have persisted in the quarter to be reported.

However, digital efforts, and increased focus on structural simplification are likely to have positively impacted the company’s performance in the to-be-reported quarter. Cost saving initiatives might have helped in driving third-quarter margins. In first and second-quarter 2020, adjusted gross margin expanded 450 and 410 basis points to 43.5% and 44%, respectively, driven by savings from the Structural Simplification program and capital light, and the trend is likely to have continued in the to-be-reported quarter.

Mattel, Inc. Price and EPS Surprise

Mattel, Inc. Price and EPS Surprise
Mattel, Inc. Price and EPS Surprise

Mattel, Inc. price-eps-surprise | Mattel, Inc. Quote

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for Mattel this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Mattel has an Earnings ESP of +6.38% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Poised to Beat Earnings Estimates

Here are some other stocks from the Zacks Consumer Discretionary space that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Camping World Holdings, Inc. CWH has a Zacks Rank #1 and an Earnings ESP of +18.7%.

Brunswick Corporation BC has a Zacks Rank #2 and an Earnings ESP of +2.75%.

Activision Blizzard, Inc. ATVI has a Zacks Rank #2 and an Earnings ESP of +5.35%.

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Mattel, Inc. (MAT) : Free Stock Analysis Report
 
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Camping World Holdings Inc. (CWH) : Free Stock Analysis Report
 
Brunswick Corporation (BC) : Free Stock Analysis Report
 
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