Spin Master Q3 Profit Rises 56%; Shares Pop

Shares of Spin Master (TOY) rose by more than 10% on Thursday morning after the children’s entertainment company reported strong third-quarter results.

Spin Master Beat Expectations

Total revenue for Q3 2021 came in at $714.5 million, up 25% from a revenue of $571.6 million reported in Q3 2020. Growth was driven by Toys, Entertainment, and Digital Games. Digital Games revenue increased 93.5% to $53.8 million, driven by the Toca Life World platform.

The company reported a profit of $135.4 million ($1.29 per share) in Q3 2021, up from $86.8 million ($0.83 per share) in Q3 2020.

On an adjusted basis, Spin Master earned $1.26 per share for its most recent quarter, compared with an adjusted profit of $0.91 per share in the prior-year period.

According to financial data firm Refinitiv, Spin Master was expected to bring in $0.88 per share in adjusted earnings, on $609.2 million in revenue.

Company Raises 2021 Outlook

Spin Master CFO Mark Segal said, “Our Gross Product Sales and Total Revenue were higher than in any quarter in our history. The combination of strong sales, diligent cost management and our continued efforts to refine our operational capability led to record profitability levels. We are pleased to raise our Gross Product Sales and Total Revenue outlook for 2021 and for the balance of the year we will continue to take a disciplined approach to manage costs and maximize profitability and cash flow.

“With a diversified portfolio of brands, entertainment franchises and digital games across our global platform and a very solid financial base, we remain focused on investing to create long term value.”

The company now expects gross product sales to increase in the mid-teens in 2021 compared to 2020, as compared to the high-single digits previously announced. Total revenue for 2021 is now expected to increase slightly above 20% compared to 2020. (See Analysts’ Top Stocks on TipRanks)

Wall Street’s Take

On October 28, RBC Capital analyst Sabahat Khan reiterated a Buy rating on TOY and a price target of C$59. This implies 26.9% upside potential.

Overall, TOY scores a Strong Buy consensus rating among analysts based on four Buys and one Hold. The average Spin Master price target of C$56 implies 20.5% upside potential to current levels.