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JAKKS Pacific (JAKK) Reports Wider-Than-Expected Q2 Loss

Zacks Equity Research

JAKKS Pacific, Inc. JAKK incurred adjusted loss of 83 cents per share in second-quarter 2019, wider than the Zacks Consensus Estimate of loss of 44 cents. The company incurred loss of 72 cents per share in the prior-year quarter.

Its net sales totaled $95.2 million, which surpassed the Zacks Consensus Estimate by 4.5%. However, the top line fell 10% on a year-over-year basis. The company expects sales to grow nearly 5% in 2019.

Following the quarterly results, shares of the company declined 10% on Aug 9. Notably, the challenging industry scenario for traditional toymakers hurt JAKKS Pacific’s second-quarter results. Also, shares of the company have lost 51% so far this year against the industry’s rally of 12%.



 

Its profit margins have been low, given the declining sales trend and higher loss from operations. However, management stated that the company is trying to improve adjusted EBITDA in 2019.

Operating Highlights

In the reported quarter, gross margin was 18.6%, down 780 basis points (bps) from the prior-year quarter. Adjusted EBITDA was a negative $11.5 million compared with a negative $8.5 million in the prior-year quarter.

JAKKS Pacific, Inc. Price, Consensus and EPS Surprise

 

JAKKS Pacific, Inc. Price, Consensus and EPS Surprise

JAKKS Pacific, Inc. price-consensus-eps-surprise-chart | JAKKS Pacific, Inc. Quote

Balance Sheet

As of Jun 30, 2019, cash and cash equivalents amounted to $37 million compared with $53.3 million as of Dec 31, 2018. Inventory declined to $53.5 million from $53.9 million at the end of Dec 31, 2018. Long-term debt, as of Jun 30, 2019, totaled $160.7 million, up from $139.8 million at the end of 2018.

Zacks Rank & Stocks to Consider

JAKKS Pacific, which shares the same space as Mattel MAT, currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the industry are Hasbro HAS — presently sporting a Zacks Rank #1 (Strong Buy), and Glu Mobile GLUU — currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hasbro and Glu Mobile’s long-term earnings are likely to increase 10.7% and 15%, respectively.

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