Simple Concepts Research Group

Here’s Why Parents Are Buying This Toy Stock That’s Returned Over 140%

by | Oct 21, 2021 | Stock Picks

JAKKS Pacific (JAKK) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for JAKKS Pacific (JAKK) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

JAKKS Pacific Fundamentals

JAKK Stock Rating

Stock Price Target: $18.21

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for JAKKS Pacific in comparison to the Recreation industry and the S&P 500.

JAKKS Pacific is a Small Cap company with a Market Cap of $117.97M.

How are investors using JAKKS Pacific earnings yield to assess the company?

JAKK Pacific (JAKK stock)_ Earnings Yield in Comparison to the Leisure Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for JAKKS Pacific is 30.76%%, in comparison to 3.55% for the S&P 500 and 1.59% for the 10-year treasury bond. The median earnings yield for the Leisure industry is 4.03%.

What does JAKKS Pacific Price-to-Earnings Ratio (P/E) tell investors about the company?

JAKKS Pacific (JAKK stock)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Leisure Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

JAKKS Pacific does not currently have a reported P/E ratio. The P/E for the Leisure industry is 23.78 and the P/E for the S&P 500 is 28.16.

What is the current Price-to-Sales Ratio (P/S) for JAKKS Pacific?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

JAKKS Pacific is currently trading at a P/S of 0.08. The P/S for the Leisure industry is 2.24 and the P/S for the S&P 500 is 3.06.

How does JAKKS Pacific Price-to-Book (P/B) compare to the Leisure industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

JAKKS Pacific P/B ratio is 6.07. The P/B for the Leisure industry is 5.56 and the P/B for the S&P 500 is 4.76.

How attractive is JAKKS Pacific Return on Invested Capital (ROIC) to investors?

JAKKS Pacific (JAKK stock)_ Return on Invested Capital in Comparison to the Leisure Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

JAKKS Pacific ROIC is currently -13.43% in comparison to 8.65% for the Leisure industry and 8.60% for the S&P 500.

What is JAKKS Pacific YTD Performance in comparison to its industry and the total market?

The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year. 

The YTD performance for JAKKS Pacific is 144.98%. The Leisure industry has a YTD performance of -8.29% in comparison to the YTD S&P 500 performance of 21%.

JAKKS Pacific (JAKK stock)_ YTD Performance in Comparison to the Leisure Industry and the S&P 500

Recent Financial Results

  • Net sales reported of $112.4M, up 43% compared to $78.8M in previous year and 18% compared to $95.2 million in 2019
  • Gross margin of 28.4%; highest Q2 gross margin percentage since 2016
  • Net loss attributable to common stockholders of $15.4M or $2.48 per share compared to $23.6M or $7.70 per share in Q2 2020
  • TTM adjusted EBITDA of $49.1M (8.7% of net sales) up 69% from $29.0M
  • Refinanced long-term debt to 2027 maturity
  • Accelerated maturity of convertible debt to September 2021, $2.9M currently outstanding as of July 2021

Stock Price Target: $18.21

Company Overview

JAKK Stock Rating

JAKKS Pacific produces and markets toys, consumables, and electronics products worldwide. The company operates through two segments: Toys/Consumer Products and Halloween. It offers action figures and accessories, such as licensed characters, baby dolls based on licenses and foot-to-floor ride-on products.

In addition, JAKKS offers Halloween and everyday costumes for various ages based on licensed and proprietary non-licensed brands and related Halloween accessories. The company sells its products through in-house sales staff and independent sales representatives to retail chain stores, department stores and wholesalers.

JAKKS Pacific was founded in 1995 and is headquartered in Santa Monica, California. The current CEO is Stephen Berman.

Be sure to add JAKK stock (JAKK) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.