Mattel stock yields an amazing 6% dividend... possibly for the last time in mid-May. The dividend has been announced and hungry investors are licking their chops. That's the only good news on the horizon, the only reason to buy or hold the stock. As always, the stock will drop immediately after the dividend is paid, but there are expectations for it to bounce back. Industry experts know the dividend is unsustainable, Mattel is bleeding out to pay it as RD smiles and talks next-gen play. But his act is wearing thin. As sure as the sun rises, a dividend cut is imminent. Whether it's announced this dividend cycle or next, it will happen and the stock will stay mid-teens for a LOOONG time unless there's a Hasbro buyout in the near future. Long story short: punch out, anyone clinging to Mattel stock in hopes of it recovering is seriously deluded.
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From Societe Financiers yesterday:
Mattel Summary:
The company’s Q1 2017 results are not impressive.
There is a declining trend in all P&L lines.
The company has to be improved its operating efficiency over the years.
Our DCF model shows that the company’s stock is overvalued.
The analysis provided in this article has not found any upside potential in Mattel's (NASDAQ:MAT) shares in the foreseeable future. The company has demonstrated financial results in the last quarter, in which we found a declining trend in the growth rate of all P&L lines. There is also evidence of declining margins over the recent years. We consider this as a headwind for revenue growth. Our DCF analysis shows that the stock is overvalued in the base scenario, which is based on a quite optimistic rate of revenue growth in the forecast period. The aggressive scenario sets an upside opportunity up to 12%.
Mattel's shares have fallen by over 17% year-to-date. The current price is around $22, which is around 35% below its 52-week high. In terms of comparative valuation, it is trading at a price-to-earnings ratio of 28x versus the five-year average of 20x. The company's main competitor, Hasbro (NASDAQ:HAS), is trading at 22.8x last-twelve-months' earnings. The stock has been in downtrend since September 2016.
First of all, we don't own DC, it's licensed and they rightly gave it up years ago. Secondly, Playskool is non-existent. But, you're right about the others: Barbie will only decline, Hot Wheels makes no money and American Girl has become irrelevant.
What's there for Hasbro to buy? Barbie, Hot Wheels, Fisher-Price, DC
They have Disney Princess, Playskool, Starwars, Marvel, Transformers
Hasbro would be stupid to buy Mattel. Better it's a private equity company that sells off the brands. Mattel as a company has shown it cannot manage itself and therefore needs to be dismantled.