Wrapping up Q3 earnings, we look at the numbers and key takeaways for the toys and electronics stocks, including Funko (NASDAQ:FNKO) and its peers.
The toys and electronics industry presents both opportunities and challenges for investors. Established companies often enjoy strong brand recognition and customer loyalty while smaller players can carve out a niche if they develop a viral, hit new product. The downside, however, is that success can be short-lived because the industry is very competitive: the barriers to entry for developing a new toy are low, which can lead to pricing pressures and reduced profit margins, and the rapid pace of technological advancements necessitates continuous product updates, increasing research and development costs, and shortening product life cycles for electronics companies. Furthermore, these players must navigate various regulatory requirements, especially regarding product safety, which can pose operational challenges and potential legal risks.
The 4 toys and electronics stocks we track reported a satisfactory Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 6.6% below.
Luckily, toys and electronics stocks have performed well with share prices up 11.2% on average since the latest earnings results.
Weakest Q3: Funko (NASDAQ:FNKO)
Boasting partnerships with media franchises like Marvel and One Piece, Funko (NASDAQ:FNKO) is a company specializing in creating and distributing licensed pop culture collectibles.
Funko reported revenues of $292.8 million, down 6.4% year on year. This print exceeded analysts’ expectations by 1.1%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EPS estimates but full-year revenue guidance missing analysts’ expectations.
"We reported solid financial results for the 2024 third quarter,” said Cynthia Williams, Chief Executive Officer of Funko.
Funko pulled off the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Still, the market seems discontent with the results. The stock is down 5.3% since reporting and currently trades at $11.55.
Is now the time to buy Funko? Access our full analysis of the earnings results here, it’s free.
Best Q3: Hasbro (NASDAQ:HAS)
Credited with the creation of toys such as Mr. Potato Head and the Rubik’s Cube, Hasbro (NASDAQ:HAS) is a global entertainment company offering a diverse range of toys, games, and multimedia experiences for children and families.
Hasbro reported revenues of $1.28 billion, down 14.8% year on year, falling short of analysts’ expectations by 1.3%. However, the business still had a strong quarter with an impressive beat of analysts’ EPS and EBITDA estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.3% since reporting. It currently trades at $66.62.
Is now the time to buy Hasbro? Access our full analysis of the earnings results here, it’s free.
Bark (NYSE:BARK)
Making a name for itself with the BarkBox, Bark (NYSE:BARK) specializes in subscription-based, personalized pet products.
Bark reported revenues of $126.1 million, up 2.5% year on year, exceeding analysts’ expectations by 0.7%. Still, it was a mixed quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
Interestingly, the stock is up 40.5% since the results and currently trades at $2.08.
Read our full analysis of Bark’s results here.
Mattel (NASDAQ:MAT)
Known for the creation of iconic toys such as Barbie and Hotwheels, Mattel (NASDAQ:MAT) is a global children's entertainment company specializing in the design and production of consumer products.
Mattel reported revenues of $1.84 billion, down 3.9% year on year. This print lagged analysts' expectations by 0.9%. Zooming out, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EPS estimates but full-year EBITDA guidance slightly missing analysts’ expectations.
The stock is up 7.8% since reporting and currently trades at $19.16.
Read our full, actionable report on Mattel here, it’s free.
Market Update
As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the US Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain. Said differently, there's still much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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