Mattel, Inc. (NASDAQ:MAT) shareholders will doubtless be very grateful to see the share price up 55% in the last quarter. But that doesn't change the fact that the returns over the last five years have been less than pleasing. You would have done a lot better buying an index fund, since the stock has dropped 36% in that half decade.
Mattel isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over half a decade Mattel reduced its trailing twelve month revenue by 6.4% for each year. While far from catastrophic that is not good. The share price decline at a rate of 6% per year is disappointing. But it doesn't surprise given the falling revenue. It might be worth watching for signs of a turnaround - buyers are probably expecting one.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Mattel is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Mattel's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Mattel's TSR, which was a 30% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
We're pleased to report that Mattel shareholders have received a total shareholder return of 27% over one year. That certainly beats the loss of about 5% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Mattel better, we need to consider many other factors. Take risks, for example - Mattel has 1 warning sign we think you should be aware of.
But note: Mattel may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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