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Dance Star Mickey and Monster High dolls are expected to fly off shelves this Christmas season. That’s not to say Americans’ confidence in their own financial security is building or that the toys’ maker, Mattel (NASDAQ:MAT), expects record profit this year. The items are among a handful of hot sellers the world’s biggest toy maker is counting on to drive sales in a sluggish holiday season. For investors, the most important thing is how the company manages its inventory and marketing. Mattel expects a late-surge in buying closer to Christmas as cautious consumers hold off to the last minute. So it’s not advertising as heavily as in past years for such things as Fisher Price products, which are traditionally strong sellers. That marketing push will come later in the season. The stock took a dip after a not-so-merry Christmas forecast and a report that third-quarter sales of Fisher Price toys were weaker than expected. But the stock has performed well this year.

Judging a stock like Mattel, you have to look at how the company has performed in good and bad years. How is it managing expenses?

YCharts Pro rates Mattel as “attractive”. Apparently Carl Icahn, whose recently disclosed share purchase gained some attention, thinks so, too. Here’s how the stock looks on a p/e basis.

Fad toys help, but Mattel has several huge and durable franchises. Barbie drives the U.S. boys and girls toys division, which makes up more than a quarter of sales. U.S. sales of Fisher Price products make up 21% of revenue and the American Girl business accounts for about 5%. International sales accounts for the remainder, just under half of revenue.

Like a lot of companies these days, Mattel is managing through difficult times. The Christmas retail season is expected to be better than last year’s dismal period but not robust. So even though Mattel may brag about innovation, there’s not that much to gloat about when you’re talking about Video Barbie Girl, a doll with a built-in video camera. Hey, it’s OK to be cautious. Mattel expects big things from Disney tie-ins and other sure bets like Barbie. After 50 years, the old girl is having a bit of a resurgence (at least domestically). Barbie sales in the U.S. rose 16% in the third quarter, while her revenue was flat overseas. Dolls are a big seller for Mattel, which also sells Disney Princess products. There are newer items out this holiday season. Bigfoot the Monster and the somewhat grating Sing-a-Ma-Jigs are expected to sell well. Hot Wheels hold their own but the company makes more money on the related higher-priced toys, like the track sets (another traditional Christmas item). After taking a pounding last year, profit margin is back up.

CEO Robert Eckert told analysts recently he expects to raise toy prices next year to counter rising costs. To appease shareholders, Mattel’s board just raised the company’s annual dividend for this year 11% to 83 cents (and said next year it will switch to a quarterly payout). For a seasonally cyclical business, those are positive moves for investors and shows why the stock is attractive.

Disclosure: none

Source: Mattel Shows Staying Power Beyond Toy Fads