Analyst: Jeffrey Low, BCom. ‘24
[email protected] Equity Research U.S. Mattel, Inc. (NASDAQ: MAT) Price Target USD$ 15.15 Consumer Discretionary – Children’s Entertainment Rating Sell Is Mattel a Sell? Share Price (Apr. 3 Close) USD$ 20.22 April 3, 2021 Total Return 33.4% Key Statistics Mattel, Inc. is an international toy manufacturer, advertiser, and distributor that offers their products in over 150 countries. Since 1945, 52 Week H/L $21.87/$7.54 they have aimed to entertain, educate, and inspire children through Market Capitalization $7.28B their collection of iconic brands including Fisher-Price, Barbie, MEGA, and Hot Wheels. Average Daily Trading Volume 3.81M Net Debt $3.25B Thesis Transient earnings growth during the pandemic and post Enterprise Value $9.65B earnings optimism has inflated the market’s perception about Net Debt/EBITDA 5.2x Mattel as a sustainable investment. Investors who bought Diluted Shares Outstanding 348.17M Mattel shares during the pandemic use Mattel’s mature Free Float 99.71% portfolio of licensed brands as a justification. However, they fail to account for how people will set aside the traditional games Dividend Yield N/A that kept them occupied during the lockdown and shift to WestPeak’s Forecast outdoor activities instead, after mass-vaccinations have been 2020E 2021E 2022E executed. The market also overlooks the fact that Mattel fails to leverage modern consumer preferences, leaving them Revenue $4.62B $4.97B $5.39B vulnerable in their post-pandemic recovery. EBITDA $476M $632M $702M Net Income $(75)M $201M $262M Drivers EPS $(0.21) $0.58 $0.75 The performance of Mattel’s products is contingent on the success of its licensed entertainment partners but given the P/E (88.1x) 32.9x 25.2x impact of COVID-19 on attitudes about in-person movie theatre EV/EBITDA 18.9x 14.2x 12.8x viewings, this will negatively impact their perceived sales 1-Year Price Performance potential.