Yahoo Finance Here's Why Investors Should Retain JAKKS Pacific (JAKK) Stock
JAKKS Pacific, Inc. JAKK is likely to benefit from digital initiatives, product expansions and licensing partnerships. This and the focus on expansion initiatives bode well. However, higher expenses are a headwind.
Let’s delve deeper.
Growth Catalysts
JAKKS Pacific realizes the importance of online retailing, thereby shifting its focus to aggressively boost online sales. In the past few quarters, JAKKS Pacific is committed to create digital experiences for online shoppers, such as videos, 360-degree product images and enhanced web pages. It continues to modify sales and logistic capabilities to capitalize on this continued shift to online. JAKK is optimistic about its robust customer demand and has been continuously making timely brand developments and product innovations to drive margins.
JAKK is focused on new product launches to drive growth. The company plans to launch the Encanto product line in the girls division that will comprise fashion dolls, large dolls, playsets, dress-up and role play. The pipeline also includes the extension of its Perfectly Cute doll and accessory line at Target, new launch of toys and collectibles based on Haribo (a global gummy candy brand). In the boys division, the company intends to work on the Black and Decker product line and the re-release of Creepy Crawlers.
The company made progress related to new licenses covering ball pits, the 10 environments, play environment, outdoor furniture, the foot-to-floor ride-on and trampoline businesses. Its new licenses include Apex Legends, Bendy and the Ink Machine, Blippi, Chucky, Ghostbusters, Hocus Pocus, Peppa the Pig, PJ Mask, Raya and the Last Dragon and Spirit.
JAKKS Pacific's outlook for 2023 and beyond is promising. Its strategic expansion into new categories and acquisition of licenses to enhance their products has led to thriving evergreen businesses. The introduction of skateboard and roller skate products in their seasonal business garnered positive customer response. To maximize this success, JAKKS Pacific is expanding its distribution channels.
JAKKS Pacific is committed to diversify its footprint outside the United States. In sync with its endeavors, the company opened sales offices and expanded product distribution agreements. After launching Tsum Tsum in the key international markets like Latin America and Asia, the company plans to expand its distribution in new territories. Its partnership with Meisheng is expected to lead to robust growth in Asia.
Image Source: Zacks Investment Research
The company’s shares have increased 28.9% so far this year compared with the industry’s 6.9% growth.
Concerns
The company has been bearing the brunt of increased expenses for some time. During first-quarter 2023, SG&A costs were $35.8 million, up from $30.7 million reported in the prior-year quarter. The upside was driven by a rise in warehouse and storage costs. As a percentage of net sales, SG&A costs were 33.3%, up from 25.4% in the prior-year quarter. JAKK is cautious about expenses related to interest expenses, stock-based compensation and banking-related fees.
Zacks Rank & Key Picks
JAKKS Pacific has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are:
Royal Caribbean Cruises Ltd. RCL sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have gained 120.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 48.5% and 162.8%, respectively, from the year-ago period’s levels.
Trip.com Group Limited TCOM flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 153.1%, on average. Shares of TCOM have increased 84% in the past year.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 76.9% and 334.5%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. SKX sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 18.8%, on average. Shares of SKX have increased 46.6% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 7.8% and 31.9%, respectively, from the year-ago period’s levels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
JAKKS Pacific, Inc. (JAKK) : Free Stock Analysis Report
Skechers U.S.A., Inc. (SKX) : Free Stock Analysis Report
Trip.com Group Limited Sponsored ADR (TCOM) : Free Stock Analysis Report
