Spotting Winners: Bark (NYSE:BARK) And Toys and Electronics Stocks In Q3
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how toys and electronics stocks fared in Q3, starting with Bark (NYSE:BARK).
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 10.4% on average since the latest earnings results.
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. This print exceeded analysts’ expectations by 0.7%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EPS estimates but a significant miss of analysts’ adjusted operating income estimates.
"We delivered our ninth consecutive quarter of year-over-year Adjusted EBITDA growth last quarter, driven in part by a 26% increase in our commerce segment revenue, compared to last year," said Matt Meeker, Chief Executive Officer of BARK.
Bark Total Revenue
Bark achieved the fastest revenue growth and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 48.6% since reporting and currently trades at $2.20.
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 a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Hasbro Total Revenue
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 10.3% since reporting. It currently trades at $63.12.
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, exceeding analysts’ expectations by 1.1%. Still, it was a mixed quarter as it posted full-year revenue guidance missing analysts’ expectations.
Funko delivered the biggest analyst estimates beat but had the weakest full-year guidance update in the group. As expected, the stock is down 3.5% since the results and currently trades at $11.77.
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 came in 0.9% below analysts' expectations. Taking a step back, it was a satisfactory quarter as it also recorded a solid beat of analysts’ EPS estimates but full-year EBITDA guidance slightly missing analysts’ expectations.
The stock is up 6.7% since reporting and currently trades at $18.97.
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 Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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