Seeking Alpha

JAKKS Pacific off and running after upgrade

  • Hilliard Lyons upgrades JAKKS Pacific (JAKK +3.7%) to a Buy rating from Neutral on its view that valuation is attractive on a long-term basis.
  • Shares of the toy maker are at a 6-month high off the firm's endorsement.
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Comments (1)
  • joker
    , contributor
    Comments (119) | Send Message
     
    This stock looks quite like a no-brain for buying. Don't know why there are so heavy a short portion out there, and still there.

     

    Here is a quite easy logic for valuation:

     

    Above $600 million revenue per year; let's simply assume a 4% profit margin, then there should have $24-$25 million earnings; and at current price, the market cap is about $160 million. So it's a 6.7X P/E stock. And kids are going to buy toys regardless recession or not; so you won't expect revenues going to drop much; and can anyone dispute a lousy 4% profit margin assumption? Any business can make above that, if they are seriously in business.

     

    So just wait and watch those no brain shorts get killed.
    11 Mar 2014, 03:30 PM Reply Like
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