The Q3 2014 earnings report for small cap toy stock JAKKS Pacific, Inc (NASDAQ: JAKK), a peer of toy stocks like Hasbro, Inc (NASDAQ: HAS) and Mattel, Inc (NASDAQ: MAT), is scheduled for before the market opens on Thursday (October 21st). Aside from the JAKKS Pacific earnings report, it should be said that Hasbro, Inc reported Q3 2014 earnings yesterday (profit jumped 43% on higher international sales and strong demand for boys' toys such as Transformers and Marvel products) while Mattel, Inc reported Q3 2014 earnings on October 16th (Barbie sales sank 21%, dragging sales down 8% and profit down 22%). Given those earnings reports along with the fact that JAKKS Pacific is the fourth most shorted stock on the NASDAQ with short interest of 52.31% (according to HighShortInterest.com), investors and the shorts alike will be paying close attention to what is reported.
What Should You Watch Out for With the JAKKS Pacific, Inc Earnings Report?First, here is a quick recap of JAKKS Pacific's recent earnings history along with EPS estimate trends from the Yahoo! Finance analyst estimates page:
| EPS Est | 1.05 | -0.82 | -0.76 | -0.29 |
| EPS Actual | 1.11 | -0.73 | -0.74 | -0.38 |
| Difference | 0.06 | 0.09 | 0.02 | -0.09 |
| Surprise % | 5.70% | 11.00% | 2.60% | -31.00% |
| Current Estimate | 0.99 | -0.54 | 0.35 | 0.53 |
| 7 Days Ago | 0.99 | -0.54 | 0.35 | 0.53 |
| 30 Days Ago | 0.98 | -0.54 | 0.35 | 0.53 |
| 60 Days Ago | 0.98 | -0.55 | 0.33 | 0.53 |
| 90 Days Ago | 1.13 | -0.33 | 0.40 | 0.55 |
Back in mid July, JAKKS Pacific reported that second quarter net sales increased 16.9% to $124.2 million and a net loss of $9.1 million (which missed expectations) verses a net loss of $46.9 million. The CEO commented:
"The positive momentum we achieved in our first quarter carried into the second quarter with sales results exceeding our expectations. Highlights for the second quarter included dolls, dress-up and role play in our Frozen line, Disney Princess dolls and dress up, seasonal outdoor toys, foot-to-floor ride-ons and ball pits, and Disguise Halloween costumes among others, but we did see Frozen taking away sales from some of our other lines."
And:
"Looking ahead to our Fall offerings, we expect the demand to continue at retail for our new Frozen dolls, dress-up and role play items, Disney licensed dolls, dress up and role play including Princess, Fairies and Sofia the First, Disguise Halloween costumes and our preschool foot-to-floor ride-ons and ball pits. For Boys, we are looking forward to launching large scale figures such as Teenage Mutant Ninja Turtles® and Star Wars Rebels™, new Hero Portal™ Plug It In & Play TV Games® titles based on Power Rangers®, Teenage Mutant Ninja Turtles and DC Comics®, and Nintendo® plush and figures, and Max Tow Truck™ vehicles."
Regarding the company's strategy, he commented:
"While the products we are developing currently, and in the future, meld both physical and digital play patterns, they are both just as compelling when played on their own. Our goal is to enhance the enjoyment of physical toys by having them used in conjunction with new digital apps and emerging technologies. Our miWorld™ play sets, Max Tow Truck™ vehicles and Selfie Booth are examples of what we believe are "best in class" uses of DreamPlay technologies in our industry."
On the news front and in late September, JAKKS Pacific announced that Disguise, Inc, its Halloween costume division, had secured a licensing agreement with Dreamworks Animation Skg Inc (NASDAQ: DWA) to produce Halloween costumes and accessories based on their portfolio of top entertainment brands. The agreement includes rights to create Halloween costumes based on a multitude of DreamWorks Animation properties, including upcoming movie releases and heritage properties such as SHREK.
What do the JAKKS Pacific, Inc Charts Say?The latest technical chart for JAKKS Pacific shows trend lines sending mixed signals:
A long term performance chart clearly shows JAKKS Pacific largely heading in the opposite direction of Hasbro, Inc and Mattel, Inc starting around the middle of 2012:
A technical chart for Hasbro, Inc shows shares bouncing between two trend lines while Mattel, Inc has had two nasty stumbles so far this year:
Kids can be fickle and many simply aren't playing with physical toys anymore like they used too. Hence, most investors will want to avoid toy stocks like JAKKS Pacific. However, the coming JAKKS Pacific earnings report could firmly send shares in an outsized move in one direction or another in light of all the short interest on the stock.
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