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JAKKS Pacific (JAKK) Surges 111% in a Year, Still Looks Attractive

JAKKS Pacific, Inc. JAKK benefits from digital innovation, a solid international footprint and an increased focus on licensing partnerships. These efforts have driven the company’s shares higher by 110.6% against the industry’s decline of 16.9%.

The Zacks Rank #1 (Strong Buy) company’s earnings and revenues in the current quarter are anticipated to witness a growth of 45.8% and 8.1% year over year, respectively. Let’s find out factors, which are likely to drive growth.

Growth Drivers

JAKKS Pacific has regularly brought in novelty in its products to cope with children’s changing play patterns and boost demand. The demand for physical toys has been declining due to younger children’s preference for digital games and other electronic learning tools. Consistent with this trend, the company has introduced a number of mobile gaming apps and digital games, along with the physical toys, which would help the company cash in on demand for smartphone gaming. JAKKS Pacific is also connecting with customers through digital videos, display banners and social ads, which would improve customer experience. Such investment in digital innovation will facilitate brand building apart from helping the company capitalize on the increasingly lucrative technology-based gaming market.

The company realizes the importance of online retailing and shifted considerable focus to aggressively boosting online sales. Over the past few quarters, JAKKS Pacific has focused on creating digital experiences for online shoppers, such as videos, 360-degree product images and enhanced web pages. It continues to modify its sales and logistics capabilities to capitalize on this continued shift to online. During fourth-quarter 2021, POS at the company’s top three U.S. customers rose 10%. The company is optimistic about its robust customer demand and is continuously making timely brand development and regular product innovation to drive margins.

JAKKS Pacific is committed to diversifying its footprint outside the United States. Consistent with its endeavors, the company has opened sales offices and expanded distribution agreements for its products. During the third quarter, the company also made progress with respect to direct distribution in France, Spain, Italy and Mexico. Moreover, the company is witnessing solid growth in Latin America and Europe.

The company is also focusing on licensing agreements to drive growth. Meanwhile, the company made progress related to new licenses covering ball pits, the 10 environment, play environment, the outdoor furniture, the foot-to-floor ride-ons and trampoline businesses. The company announced the launch of licensed ReDo Skateboards in 2022. The company’s Disguise costume business is likely to perform well in 2022. In recent quarters, several new licenses will come on board. In 2022, the company will add more offerings, from CoComelon to Squid Games, with Stranger Things and Sonic 2 movie costumes.

Zacks Investment Research
Zacks Investment Research

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Other Key Picks

Other better-ranked stocks in the Consumer Discretionary sector are Funko, Inc. FNKO, SeaWorld Entertainment, Inc. SEAS and Bluegreen Vacations Holding Corporation BVH.

Funko sports a Zacks Rank #1 (Strong Buy) at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average. Shares of the company have declined 19% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Funko’s current financial-year sales and EPS (earnings per share) suggests growth of 22.6% and 26.8%, respectively, from the year-ago period’s reported levels.

SeaWorld Entertainment presently carries a Zacks Rank #2 (Buy). SEAS has a trailing four-quarter earnings surprise of 137.2%, on average. Shares of the company have gained appreciated 33.4% in the past year.

The Zacks Consensus Estimate for SEAS current financial year sales and EPS indicates growth of 14% and 27.3%, respectively, from the year-ago period’s reported levels.

Bluegreen Vacations presently flaunts carries a Zacks Rank #1. BVH has a trailing four-quarter earnings surprise of 425.1%, on average. The stock has increased surged 29.2% in the past year.

The Zacks Consensus Estimate for BVH’s current financial year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the year-ago period’s reported levels.

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JAKKS Pacific, Inc. (JAKK) : Free Stock Analysis Report

SeaWorld Entertainment, Inc. (SEAS) : Free Stock Analysis Report

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Bluegreen Vacations Holding Corporation (BVH) : Free Stock Analysis Report

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