Mattel stock scored a powerful breakout Thursday following strong fourth-quarter results late Wednesday.
Mattel shares climbed 7.65% to 24.49 on the stock market today. That put MAT stock well above a 23.28 buy point in a double-bottom base, based on its daily chart and MarketSmith chart analysis.
Earnings Boosts MAT Stock
Late Wednesday, the maker of Barbie, Hot Wheels and other toy brands reported a 33% jump in earnings to 53 cents per share, well above the 30 cents FactSet analysts expected. Sales climbed 8% to $1.75 billion, beating estimates for $1.66 billion. That sent MAT stock sharply higher in afterhours trading.
Sales in the doll category, which includes Polly Pocket, American Girl and Barbie, rose 27% in the U.S. and were up 13% worldwide. Barbie had a "remarkable year" with gross billings climbing 24% in 2021, to the highest level on record, according to Mattel.
"Our turnaround is complete. We are now in growth mode," said CEO Ynon Kreiz, during the Q4 earnings call.
Looking ahead, Mattel sees 2022 revenue climbing between 8% and 10% vs. 2021. For 2023, Mattel sees high single-digit sales growth. That's up from a prior estimate of mid-single-digit growth.
But the company has no plans to restart issuing a dividend. Instead, it's using its current capital allocation to invest in growth areas.
"The approach is — and the opportunity is — to pursue M&A areas that are accretive to drive growth for the company, corporate development opportunities that we believe can advance what we do, improve our growth profile and overall create economic value for shareholders," Kreiz said during the call.
Mattel's earnings follow rival Hasbro, which on Tuesday reported Q4 results that also topped Wall Street expectations even as the toymaker faced inventory issues due to supply chain delays during the holiday season. But Hasbro warned that freight and raw material price increase would hit margins this year.
While MAT stock was breaking out, Hasbro shares fell 1.35% on Thursday.
Mattel's Dolls Propel Toymaker Into Film
The dolls division launched Mattel into the movie business. Big-name stars have signed on to bring the popular dolls to life.
Actors Margot Robbie and Ryan Gosling will star in a Barbie movie directed by Greta Gerwig. And Lena Dunham is working on a Polly Pocket movie. There is also a Hot Wheels film in the works and even a Magic 8 Ball horror film franchise.
The company's Masters of the Universe live-action film is supposed to start production this summer. The film, based on futuristic sci-fi figurines, is in development with Netflix.
Mattel will also have the global licensing rights for all Disney Princess and Frozen dolls and for any dolls related to the upcoming live-action Little Mermaid movie.
At the start of trade Thursday, MAT stock gapped up to well above the buy range, which ran to 24.44. That put the stock into a buy range above a 25.14 entry point on a breakaway gap buying opportunity.
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