Here’s Why Investors Should Hold JAKKS Pacific (JAKK) Stock – June 29, 2022
JAKKS Pacific, Inc. (JAKK – Free Report) is likely to benefit from a strong international presence, product expansions and digital initiatives. However, coronavirus-induced supply chain disruptions and increased transportation costs are of concern.
Let’s go deeper.
JAKKS Pacific is committed to diversifying its footprint outside of the United States. In line with its efforts, the company has opened sales offices and expanded product distribution agreements. Its partnership with Meisheng should result in robust growth in Asia. During the third quarter of 2021, the company made progress in direct distribution in France, Spain, Italy and Mexico. It is experiencing solid growth in Latin America and Europe. During the first quarter of 2022, the company announced distribution partnerships in the United States and Asia-Pacific with Wow! Stuff, a European-based toy innovation company, for two cool product lines. This should drive growth in future periods.
The company focused on launching new products to drive growth. During the third quarter of 2021, the company launched a new doll program (in the United States) in association with Disney and Target. Under the Disney ily 4EVER brand, the fashion line includes 18 installations or related accessories inspired by Disney stories and cartoons. This includes Minnie Mouse, Tinkerbell, Stitch, Ariel, Elsa, Rapunzel and more. The company is also prone to innovations and product expansion to drive growth. To this end, it has planned an expansion of lines and categories in companies like Disney Princess, the Star Collection, and Perfectly Cute in the Dolls and Roleplay aisles and Super Mario, Black & Decker, Apex Legends in Action and Play Collectible aisles. .
The company realized the importance of online retail and focused on aggressively increasing online sales. Over the past few quarters, JAKKS Pacific has been committed to creating digital experiences for online shoppers, such as videos, 360-degree product images, and enhanced web pages. It continues to modify its sales and logistics capabilities to capitalize on this continued transition to the web. During the first quarter of 2022, the points of sale of the company’s three main American customers increased by 40%. The company is optimistic about the strong demand from its customers and continuously carries out timely brand developments and product innovations to increase its margins.
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Shares of the company are up 28% so far this year, against an industry decline of 0.1%.
The coronavirus outbreak has wreaked havoc around the world. It’s no surprise that the toys, games and hobby industry has been grappling with the storyline, and JAKKS Pacific isn’t immune either. As a result, the company’s operations were negatively impacted by supply chain disruptions in the first quarter of 2022. Although the company has taken substantial steps to overcome the same issues, additional transportation and storage remain headwinds. In the first quarter, gross margin was 24.7%, down 640 basis points from 31.1% in the prior year quarter. The decline was primarily caused by an increase in inbound freight spending. The company is actively monitoring the global situation and the resulting impact on its financial condition, liquidity, operations, suppliers, industry and workforce.
Zacks ranking and key picks
JAKKS Pacific has a Zacks rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are Bluegreen Vacations Holding Corporation (BVH – free report), Civeo Corporation (CVEO – free report) and Boyd Gaming Corporation (BYD – free report).
Bluegreen Vacations sports a No. 1 Zacks rank. BVH has a trailing four-quarter earnings surprise of 85.9% on average. The stock is up 44% over the past year.
Zacks consensus estimate for BVH’s sales and earnings per share (EPS) for the current fiscal year indicate growth of 11.2% and 35.1%, respectively, from levels recorded a year ago. a year.
Civeo sports a No. 1 Zacks rank. The company has a four-quarter earnings surprise of 1,565.1% on average. Shares of the company are up 52.7% over the past year.
The Zacks consensus estimate for CVEO sales and EPS in 2022 suggests growth of 12.5% and 1,450%, respectively, from prior year period levels.
Boyd Gaming wears a Zacks Rank #2 (Buy). BYD has a four-quarter earnings surprise of 24.2% on average. Shares of the company are down 15.7% over the past year.
Zacks’ consensus estimate for Boyd Gaming’s current-year sales and EPS suggests growth of 6.8% and 3%, respectively, from reported levels in the prior year period.