Toy maker JAKKS Pacific's Q4 sales fall 3%, gross margin up

Overview

• Toy maker's Q4 net sales fell 3% yr/yr, but adjusted net loss narrowed significantly

• Company's Q4 adjusted EBITDA improved significantly compared to last year

• Gross margin increased to 31% in Q4, up 380 basis points from last year

Outlook

• JAKKS Pacific anticipates growth opportunities with a new strategic initiative in 2027

• Company maintains dividend payout, indicating confidence in financial stability

• JAKKS Pacific sees improved gross margins and adjusted EBITDA as focus shifts to profitability

Result Drivers

• GROSS MARGIN IMPROVEMENT - Gross margin increased to 31% in Q4, up 380 basis points from last year, attributed to improved cost management

• INTERNATIONAL SALES GROWTH - Sales outside of the United States were up 10% in the quarter, led by Europe and Latin America

• TARIFF POLICY STABILIZATION - Significant customer order disruptions from tariff policy changes abated in Q4, allowing for a more predictable environment

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the toys & children's products peer group is "buy"

• Wall Street's median 12-month price target for JAKKS Pacific Inc is $28.50, about 60.7% above its February 18 closing price of $17.73

• The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 7 three months ago

Press Release: ID:nGNX8PLrs3

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