MAT: Alert, Mattel Inc Had A Very Poor First Quarter Earning.
On 04/17/2013 Mattel Inc. (NASDAQ:MAT) released its Q1 2013 earning at $ 0.11 per share, which was a - 90.18% from its previous quarter earning. The earning of previous quarter (Q4 2012) was at $1.12 per share.
Accounting earnings help to measure a company's profitability. The material information from a quarterly financial report should be the dollar amount of earning per share, and the comparison to its immediate previous quarter earnings per share to show whether the company's profits increased or decreased. In the report, Mattel did not mention negative earnings from its previous quarter but instead stated that the company made "growth in earnings".*
*"Mattel Inc.'s (MAT) first-quarter 2013 earnings of 11 cents per share beat the Zacks Consensus Estimate by 37.5% and were considerably higher than the year-ago earnings per share of 2 cents. Year-over-year increase in net sales combined with lower costs led to the growth in earnings." Mattel earning report 4/17/13. From TD Ameritrade.
The report on 04/17/2013 was a quarterly report, not an annual report. Mattel (1) did not compare or mention earnings to its previous quarter (Q4 2012) but instead compared it with the quarterly earnings from one year ago which was inappropriate, and (2) Mattel stated that they beat the Zacks Consensus Estimate, which is meaningless. (First, Zacks is not an officially accepted authority as an earnings estimator. Secondly, Zacks' estimation is so bad that it is 37.5% off the actual earnings. Zacks has a very negative view of Mattel. According to Zacks, Mattel's Q1 2013 earning is only $0.069 per share and not even 11cents). By doing so, Mattel wrongfully stated positive earnings for Q1 2013 instead of negative earnings as a matter of fact. Furthermore, in the above earnings report, Mattel stated that "Year-over-year increase in net sales combined with lower costs led to the growth in earnings" was another misstatement, because "earnings" are a company's net profits after expenses. If there was an increase in net sales combined with lower costs the "earnings" should be higher and not at -90.18% from previous quarter as the matter of fact.
Those who were not aware of the true facts might be misled into believing that Mattel grew in their earnings while in fact Mattel had a big loss in earnings in its first quarter of 2013.
Zacks.com and S&P Capital IQ also painted an untrue picture of Mattel's Q1 2013 earning to the public. ** (see more information in the following website articles)
**"Mattel's Earnings and Revs Beat in 1Q - Analyst Blog Mattel's first-quarter 2013 earnings per share and revenues beat the Zacks Consensus Estimates.Zacks.com"
**"S&P REITERATES HOLD RECOMMENDATION ON SHARES OF MATTEL S&P Capital IQ"
A yeas ago (Q1 2012) Mattel's stock price was at $ 32.00 per share. Since then, Mattel had made some improvements in their earnings, especially the Q4 2012 with $1.12 earning per share. The profit made by the company was reflected in its stock price to $43.00 per share prior to its 2013 first quarter earning release.
As the result of these irregularities mentioned above, on 04/17/2013 the stock had a surprise gap up open of + $1.97 instead of opening lower as it would be normally. So far, the stock price does not reflect the true value of the company.
Investors and the public should be aware and alert! I have no intention to recommend buy/sell of the stock.
"During the most recent quarter, one million shares were sold in insider trading." Sources: TD Ameritrade 4/25/2013
Disclosure: I am short MAT.
Additional disclosure: Self identity: I was in MBA program in college. I am a real estate broker working in the industry for more than 30 years. Recently, I study and do research in Stocks investing.