U.S. markets open in 52 minutes
  • S&P Futures

    3,634.25
    +7.00 (+0.19%)
     
  • Dow Futures

    29,886.00
    +58.00 (+0.19%)
     
  • Nasdaq Futures

    12,197.25
    +45.00 (+0.37%)
     
  • Russell 2000 Futures

    1,842.40
    -2.20 (-0.12%)
     
  • Crude Oil

    45.47
    -0.24 (-0.53%)
     
  • Gold

    1,809.40
    -1.80 (-0.10%)
     
  • Silver

    23.26
    -0.19 (-0.79%)
     
  • EUR/USD

    1.1927
    +0.0014 (+0.12%)
     
  • 10-Yr Bond

    0.8780
    -0.0040 (-0.45%)
     
  • Vix

    21.40
    -0.24 (-1.11%)
     
  • GBP/USD

    1.3321
    -0.0035 (-0.26%)
     
  • USD/JPY

    104.1670
    -0.0830 (-0.08%)
     
  • BTC-USD

    16,912.70
    -253.95 (-1.48%)
     
  • CMC Crypto 200

    330.75
    -39.76 (-10.73%)
     
  • FTSE 100

    6,336.56
    -26.37 (-0.41%)
     
  • Nikkei 225

    26,644.71
    +107.40 (+0.40%)
     

Mattel, Inc. (NASDAQ:MAT): When Will It Breakeven?

Simply Wall St
·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at Mattel, Inc.'s (NASDAQ:MAT) future prospects. Mattel, Inc., a children’s entertainment company, designs and produces toys and consumer products worldwide. The US$4.3b market-cap company posted a loss in its most recent financial year of US$214m and a latest trailing-twelve-month loss of US$249m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Mattel will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Mattel

Consensus from 13 of the American Leisure analysts is that Mattel is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$143m in 2021. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 59%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Mattel's upcoming projects, though, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Mattel is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Mattel which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Mattel, take a look at Mattel's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

  1. Valuation: What is Mattel worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Mattel is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Mattel’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.