Mattel, Inc. MAT finds itself riding the wave of success, with soaring sales in the Hot Wheels brand and a diverse product range in the North America segment. The company’s strategic moves to broaden its product portfolio and delve deeper into the digital space are propelling its growth trajectory.
The Zacks Rank #2 (Buy) corporation is anticipated to witness an 11.4% year-over-year increase in earnings for 2024. Over the past 60 days, estimates for 2024 earnings have seen a 4.6% upward revision.
Let’s uncover the layers.
The Driving Forces Behind Growth
The spectacular performance of Hot Wheels continues to captivate investors. In the fourth quarter of 2023, global gross billings for the Hot Wheels brand surged 19% (reported) and 16% (constant currency) year over year. The consistent upward trend in Hot Wheels sales, coupled with robust confidence in its future prospects, bolsters the brand’s standing. Additionally, expansion initiatives in the product portfolio and digital realm are adding to its growth momentum.
With a robust lineup encompassing core brands, licensed products, and lucrative collaborations, Mattel is primed for expansion. Hot Wheels’ popularity among children has cemented its status as a leader across various product categories for years. Ongoing strategic investments in the brand aim to enhance the levels of enjoyment children derive from Hot Wheels.
Mattel’s realm now extends beyond toys to encompass consumer product categories like apparel, fashion, and accessories. In 2023, Barbie solidified its position as the top global doll brand and the second-largest toy brand overall. Hot Wheels achieved a sixth consecutive year of record gross billings. Furthermore, Monster High underwent a successful global relaunch, emerging as the fastest-growing property in the Dolls category.
MAT’s focus on licensing partnerships remains a crucial growth driver. In July 25, 2023, the company renewed its multi-category licensing agreement with Warner Bros. Discovery Global Consumer Products. The product range includes iconic brands like DC Universe, Bat Wheels, Harry Potter, Fantastic Beasts, and FRIENDS. Heading into the fourth quarter of 2023, management is confident in its diverse selection of innovative toys spanning multiple categories, play patterns, and price ranges.
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Standout Selections in the Market
Other noteworthy stocks in Zacks’ Consumer Discretionary sector include:
Royal Caribbean Cruises Ltd. RCL, boasting a Zacks Rank #1 (Strong Buy) with an average trailing four-quarter earnings surprise of 26.4%. RCL’s stock surged 121.8% over the past year.
Trip.com Group Limited TCOM, holding a Zacks Rank #2 with an average trailing four-quarter earnings surprise of 53.1%. TCOM saw a 29.2% increase in its stock price over the past year.
Hyatt Hotels Corporation H, also with a Zacks Rank #2 and an average trailing four-quarter earnings surprise of 17.8%. H witnessed a 44.2% appreciation in its stock price over the past year.
The Zacks Consensus Estimates project a considerable rise in sales and earnings per share (EPS) for these companies, painting a positive outlook for investors.
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