Earnings Preview: Mattel

Mattel (MAT) is expected to report Q2 earnings before market open Friday, July 18, with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for a profit of 3c on revenue of $1.04B. The consensus range is (1c) to 6c for EPS, and revenue of $1B to $1.12B, according to First Call.

Analyst  Views

In a July 9 note to investors, BMO Capital upgraded shares of the toymaker to Market Perform, but said that the fundamental view of the company, as well as the Underperform-rated toy industry, has not changed. The analyst said the upgrade, which "should not be confused as a recommendation to buy," was "based solely on valuation". The firm said Mattel's current toy lineup is "less inspiring" than several of its competitors and added the toy industry remains challenged by a weak environment and consumer reaction to lead-paint recalls.

A Zacks analyst noted that Mattel, which has faced difficulties with respect to margin pressures and deterioration in some of its core brands, posted Q1 results that were disappointing "nearly across the board," with revenues, margins, and earnings all falling short of expectations. Rising costs, coupled with an unfavorable shift in product mix, had negatively impacted Mattel's margins regardless of product price increases and expects the company to struggle in the near-term.

Wedbush said that shipments of Batman toys, as well as price increases, may have "saved" the quarter.