It has been about a month since the last earnings report for Mattel (MAT). Shares have lost about 1.3% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Mattel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Mattel Q4 Earnings Beat Estimates, Revenues Lag

Mattel reported fourth-quarter 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.

In 2024, Mattel repurchased $400 million worth of shares and further improved its leverage ratio. The company remains ahead of schedule in achieving its $200 million cost-savings target by 2026. For 2025, Mattel projects continued revenue and earnings growth, increased investments in digital gaming, and a $600 million share repurchase program, underscoring its commitment to long-term shareholder value creation.

Mattel’s Q4 Earnings & Sales Discussion

Mattel reported adjusted earnings per share (EPS) of 35 cents, which beat the Zacks Consensus Estimate of 23 cents by 52.2%. It reported adjusted EPS of 29 cents in the prior-year quarter.

Net sales amounted to $1.64 billion, marginally missing the consensus estimate of $1.66 billion by 0.5%. The top line increased 2% on a reported basis and 3% in constant currency (cc) year over year.

Net sales in the North America segment increased 1% year over year on a reported basis and at cc. The International segment’s net sales increased 3% (as reported) and 6% (at cc) year over year.

In the North America segment, gross billings inched up 1% (as reported and at cc) year over year. The upside was backed by growth in Vehicles (primarily Hot Wheels), and Action Figures, Building Sets, Games, and Other (primarily Action Figures). This was partly offset by declines in Infant, Toddler, and Preschool (primarily Baby Gear & Power Wheels) and Dolls (primarily Barbie).

Gross billings in the International segment increased 3% (on a reported basis) and 6% (at cc) year over year. The uptick was primarily due to a rise in Vehicles (primarily Hot Wheels) and Infant, Toddler, and Preschool. This was partially offset by a decline in Dolls (primarily Barbie).

MAT’s Category-Wise Worldwide Sales

Mattel, through its subsidiaries, sells a broad range of toys. These items are grouped under different categories: Dolls; Infant, Toddler and Preschool; Vehicles and Action Figures, Building Sets, Games and Other.

Worldwide gross billings by Mattel Power Brands increased 2% year over year on a reported basis (and 3% at cc) to $1.88 billion. The gross billings for Dolls witnessed a fall of 4% year over year on a reported basis and at cc due to declines in Barbie.

Gross billings for Infant, Toddler and Preschool declined 5% (on a reported basis) and 4% (at cc) year over year due to declines in Baby Gear & Power Wheels.

Gross billings for Vehicles were up 14% (on a reported basis) and 16% year over year (at cc), primarily driven by growth in Hot Wheels. Gross billings for Action Figures, Building Sets, Games and Other were also up 5% (on a reported basis) and 6% year over year (at cc) due to growth in Action Figures and Games, partly offset by declines in Other and Building Sets.

MAT’s Operating Results

During the fourth quarter, Mattel’s adjusted gross margin was 50.8%, up 200 basis points year over year. The upside was primarily driven by savings from supply-chain efficiencies, savings from the Optimizing for Profitable Growth program and foreign exchange favorability.

Adjusted EBITDA during the quarter came in at $248.9 million compared with $234 million.

Adjusted other selling and administrative expenses increased $9 million year over year to $418 million. The uptick was mainly caused by higher employee compensation, partly offset by savings from the Optimizing for Profitable Growth program.

Balance Sheet of Mattel

As of Dec. 31, 2024, MAT’s cash and cash equivalents were $1.39 billion compared with $1.26 billion at 2023-end. Total inventories at the end of the quarter were $501.7 million compared with $571.6 million at 2023-end.

Long-term debt (as of Dec. 31) was $2.33 billion, approximately on par with the reported value at 2023-end. Shareholders’ equity was $2.26 billion at the end of the quarter.

MAT 2024 Highlights

Net sales in 2024 amounted to $5.38 billion compared with $5.44 billion in 2023.

Net income in 2024 came in at $541.8 million compared with $214.4 million reported in 2023.

In 2024, adjusted diluted EPS came in at $1.62 compared with $1.23 reported in the previous year.

MAT’s 2025 Outlook

Management expects 2025 net sales to increase in the range of 2-3% year over year. The company expects adjusted operating income to be between $740 and $765 million.

Mattel anticipates adjusted EPS to be between $1.66 and $1.72 compared with $1.62 reported in 2024. The adjusted tax rate is considered to be between 23% and 24%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

The consensus estimate has shifted -16.67% due to these changes.

VGM Scores

At this time, Mattel has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Mattel has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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