We remain positive on Mattel Inc. (MAT) as the company has an industry leading position, a robust balance sheet and continues to benefit from its cost-containment initiatives. Its focus on top-line growth, margin expansion and effective cash deployment also augur well.
However, we remain cautious on the stock based on increasing input costs and adverse impact from currency exchange rate. Moreover, competition from private label toys and video game industry is intensifying and orders from retailers remain conservative.
Accordingly, we keep our conservative view on Mattel shares and maintain a Zacks #3 Rank, which translates into a short-term Neutral recommendation. Our long-term recommendation for the stock remains in the middle of the road at Neutral.
Apart from Mattel, other stocks that promise growth opportunities are Hasbro Inc. (HAS) and JAKKS Pacific Inc. (JAKK), in which we currently have Zacks #2 Rank, which translates into a short-term Buy recommendation. Hasbro reported better-than-expected second quarter results, which were driven by tight cost-control initiatives. JAKKS second-quarter earnings also surpassed the Zacks Consensus Estimate by 6 cents, aided by cost cuts, restructuring activities and strong demand for its products.