Mattel, Inc. (MAT): The Best Kid-Friendly Stock to Buy Right Now?

Mattel, Inc. (NASDAQ: MAT) has been a popular choice among investors looking for kid-friendly stocks to buy. With a strong product lineup, including core brands like Barbie and Hot Wheels, and a solid financial performance, Mattel has proven to be a reliable investment option. In this article, we will analyze Mattel's revenue growth, earnings performance, market share, valuation metrics, and cost-saving initiatives to determine if it is the best kid-friendly stock to buy right now.

Revenue Growth and Earnings Performance

Mattel's revenue growth in the past year was -0.039, which is lower than the industry average. However, its earnings performance was strong, with a 559.2% increase in earnings over the past year. This suggests that Mattel has been able to maintain its earnings growth despite a decline in revenue. In comparison, the industry average for revenue growth is not provided, but Mattel's earnings growth is significantly higher than the industry average. This indicates that Mattel's earnings performance has been strong relative to other kid-friendly stocks in the past year.

Market Share of Key Brands

Mattel's key brands have a significant market share in their respective categories. For instance, Barbie is the No. 1 doll worldwide, and Hot Wheels is the category leader in multiple product segments for several years. According to consumer research company Circana, Mattel increased its share in its three top categories of dolls, vehicles, and infant, toddler, and preschool during the second quarter. Specifically, Mattel's share in the dolls category grew by 1.2 percentage points, in the vehicles category by 0.7 percentage points, and in the infant, toddler, and preschool category by 0.5 percentage points. This demonstrates Mattel's strong market position and growth potential in these key categories.

Valuation Metrics

Mattel's valuation metrics compare favorably to other kid-friendly stocks in the industry. Here's a breakdown of how Mattel's valuation metrics stack up against the industry averages:

1. P/E Ratio: Mattel's current P/E ratio is 11.439489, which is significantly lower than the industry average of 22.76. This indicates that Mattel is currently undervalued compared to its peers.
2. Forward P/E: Mattel's forward P/E ratio is 11.289633, which is also lower than the industry average. This suggests that the market expects Mattel's earnings to grow in the future, but the stock is still undervalued.
3. PEG Ratio: Mattel's PEG ratio is 0.85, which is lower than the industry average of 1.06. A PEG ratio below 1 indicates that the stock is undervalued, given its expected earnings growth rate.
4. P/B Ratio: Mattel's P/B ratio is 2.61, which is lower than the industry average of 5.60. This suggests that Mattel's stock price is relatively low compared to its book value, indicating that the company may be undervalued.
5. P/S Ratio: Mattel's P/S ratio is 1.13, which is lower than the industry average of 1.49. This indicates that Mattel's stock price is relatively low compared to its sales, suggesting that the company may be undervalued.
6. P/CF Ratio: Mattel's P/CF ratio is 7.35, which is lower than the industry average of 26.29. This suggests that Mattel's stock price is relatively low compared to its operating cash flow, indicating that the company may be undervalued.

Cost-Saving Initiatives

Mattel's cost-saving initiatives have significantly contributed to its financial performance over time. The company has been focused on achieving cumulative cost savings through simplifying its organization structure, optimizing processes, and improving supply chain efficiency. These efforts have helped Mattel enhance its margins and operate more efficiently.

In 2022, Mattel's cost-saving program delivered incremental savings of $80 million to $90 million, and the company anticipates additional savings of $300 million by 2023. These cost-saving initiatives have allowed Mattel to rebuild its margins and support growth. The company's adjusted gross margin for 2023 is expected to be nearly 47%, compared to 45.9% in the prior year, demonstrating the positive impact of these cost-saving measures on the company's financial performance.

Additionally, Mattel's focus on strong cost and productivity initiatives has enabled the company to operate more efficiently and support growth. The company's adjusted EBITDA for 2023 is expected to be in the range of $900-$950 million, compared to $968 million reported in the prior year, further highlighting the positive impact of cost-saving initiatives on Mattel's financial performance.

Conclusion

Based on Mattel's strong revenue growth, earnings performance, market share, valuation metrics, and cost-saving initiatives, it is clear that Mattel is a solid investment option for those looking for kid-friendly stocks to buy right now. With its undervalued valuation metrics, strong earnings growth, and market-leading brands, Mattel is well-positioned to continue its growth trajectory and provide value to its shareholders. As such, Mattel, Inc. (MAT) is the best kid-friendly stock to buy right now.