A tale of two toymakers: Mattel soars, Hasbro sinks

On Friday shares of Mattel continued to soar after a strong earnings beat on Thursday, while shares of rival Hasbro sank, the result of a poor earnings showing before the bell. although there is actually more going on than these stock moves show.

the item was clear heading into the holiday season in which the toy industry was going to take a hit. The bankruptcy as well as subsequent closure of Toys R Us meant Hasbro, Mattel as well as additional toymakers had far fewer shelves on which to place their inventory than in years prior.

While quite a few retailers, including Target, Walmart as well as even drugstores, expanded their toy sections This specific past holiday season, the item wasn’t enough to offset the hole left by Toys R Us’ departure coming from the market.

Industry-wide sales of toys fell 2 percent in 2018, according to market researcher NPD Group.

Investors rallied behind Mattel on Thursday after the company exceeded analyst expectations during the fourth quarter. Shares spiked as much as 27 percent on Friday before retreating slightly. The stock is actually down nearly 6 percent over the past year, putting its market value at $4.3 billion. Analysts expressed renewed confidence inside the company, which has been inside the midst of a multiyear turnaround.

“Mattel’s Q4 results were materially better relative to expectations, in our opinion, as well as hence we came away coming from This specific update incrementally more upbeat on business fundamentals,” Drew Crum, analyst at Stifel, wrote in a research note Thursday.

Investors as well as analysts were less confident about Hasbro, however. The company posted weaker-than-expected profits as well as continued to blame Toys R Us for its sales woes.

“We are surprised with the severity of the miss, although take some solace in which retail inventory levels have significantly declined, which should allow Hasbro to start 2019 having a relatively clean channel as well as a more efficient cost structure,” Eric Handler, analyst at MKM Partners, wrote in a research note Friday.

Hasbro shares were down 4.9 percent Friday after falling as much as 10 percent before the opening bell. Hasbro’s stock is actually down nearly 11 percent over the past year, bringing its market value to $11.4 billion.

“If you took the logo off the top, Hasbro’s earnings read like a company in which was restructuring as well as Mattel read like a growth company,” said Gerrick Johnson, analyst at BMO Capital Markets.