Toy and entertainment company Mattel (NASDAQ:MAT) reported its Q1 2024 financial results on Tuesday, April 23. Its sales dipped as the uplift from last year’s Barbie movie eased, and the challenging macroeconomic environment weighed on consumer demand. However, a narrower-than-expected loss boosted MAT stock, which rose approximately 2.7% in Tuesday’s after-hours trading.
It is important to highlight that Mattel’s CEO, Ynon Kreiz, sees improving trends in consumer demand for the company’s products. Moreover, Kreiz expects to gain market share in 2024.
With this backdrop, let’s delve into Mattel’s Q1 performance.
Mattel Delivers Mixed Q1 Performance
Mattel delivered mixed Q1 financials. Its net sales of $809.5 million fell 1% year-over-year and came below the Street’s estimate of $833.5 million. The company’s worldwide gross billings for dolls were $295 million, down 4% year-over-year.
MAT delivered an adjusted loss of $0.05 per share in Q1, lower than the previous quarter’s loss of $0.24 per share. Moreover, it compared favorably to the Street’s forecast of a loss of $0.13 per share.
Outlook
Mattel’s management reiterated the full-year sales and earnings outlook. The company’s top line will likely remain flat in 2024 on a constant currency basis. However, lower inventory management expenses and cost deflation in ocean freight will likely cushion its margins and bottom line.
Mattel projects its adjusted EPS to be in the range of $1.35 to $1.45, reflecting double-digit year-over-year growth from $1.23 in 2023. Moreover, the company expects to achieve a positive free cash flow of approximately $500 million.
Is MAT Stock a Good Buy?
Mattel stock has been trading in the red so far this year, underperforming the S&P 500’s (SPX) nearly 5% gain. Wall Street is cautiously optimistic about MAT’s prospects amid macro concerns.
MAT stock has six Buys and five Hold recommendations for a Moderate Buy consensus rating. The average MAT stock price target of $23.10 implies 23.33% upside potential from current levels.
