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UBS Rated Mattel a ‘Buy’

Yesterday’s Consumer Pops and Drops: HAS, MO, HIS, PM, and ECL

(Continued from Prior Part)

Price movement of Mattel

Mattel (MAT) has a market cap of $11.0 billion. MAT fell by 0.37% to close at $32.35 per share on March 24, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases were -1.4%, 0.09%, and 20.6%, respectively.

Currently, MAT is trading 1.1% below its 20-day moving average, 6.5% above its 50-day moving average, and 27.7% above its 200-day moving average.

The ALPS Sector Dividend Dogs ETF (SDOG) invests 2.2% of its holdings in Mattel. The ETF tracks an equal-weighted index of the five highest-yielding S&P 500 securities in each sector. The YTD price movement of SDOG was 9.1% as of March 23, 2016.

The WisdomTree Dividend Ex-Financials ETF (DTN) invests 2.0% of its holdings in Mattel. The ETF tracks an index selected and weighted by dividends that exclude financial firms.

The market caps of Mattel’s competitors are as follows:

  • Walt Disney Company (DIS): $158.6 billion

  • Hasbro (HAS): $9.7 billion

UBS initiated coverage of Mattel

UBS has initiated the coverage of Mattel with a “buy” and set the price target at $36.0 per share.

Performance of Mattel in recent 4Q15 and 2015

Mattel reported 4Q15 net sales of $1,999.7 million, a rise of 0.29% compared to net sales of $1994.0 million in fiscal 4Q14. Sales of Mattel girls and boys and American girl brands fell by 7.5% and 14.1%, respectively, but sales of Fisher-Price brands and construction and arts and crafts brands rose by 8.2% and 0.15%, respectively, in fiscal 4Q15, compared to sales in fiscal 4Q14.

Its net income and EPS (earnings per share) rose to $215.2 million and $0.63, respectively, in fiscal 4Q15 compared to $149.9 million and $0.44, respectively, in fiscal 4Q14.

Fiscal 2015 results

In fiscal 2015, MAT reported net sales of $5,702.6 million, a fall of 5.3% YoY (year-over-year). The company’s cost of sales as a percentage of sales rose by 1.2%, and its operating income fell by 17.3% in fiscal 2015.

Its net income and EPS fell to $369.4 million and $1.08, respectively, in fiscal 2015, compared to $498.9 million and $1.45, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents fell by 8.1%, and its inventories rose by 4.6% in fiscal 2015. Its current ratio and long-term debt-to-equity ratios fell to 1.9 and 0.68, respectively, in fiscal 2015, compared to 2.9 and 0.71, respectively, in fiscal 2014.

The price-to-earnings and price-to-book value ratios of Mattel are 21.3x and 4.2x, respectively, as of March 24, 2016.

In the next part, we’ll look at General Mills.

Continue to Next Part

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