Stock Analysis

Recent 7.5% pullback isn't enough to hurt long-term Mattel (NASDAQ:MAT) shareholders, they're still up 91% over 3 years

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Mattel, Inc. (NASDAQ:MAT) shareholders might be concerned after seeing the share price drop 12% in the last month. But over three years, the returns would have left most investors smiling To wit, the share price did better than an index fund, climbing 91% during that period.

While the stock has fallen 7.5% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

View our latest analysis for Mattel

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Mattel became profitable within the last three years. So we would expect a higher share price over the period.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NasdaqGS:MAT Earnings Per Share Growth March 15th 2023

It is of course excellent to see how Mattel has grown profits over the years, but the future is more important for shareholders. This free interactive report on Mattel's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 10% in the twelve months, Mattel shareholders did even worse, losing 31%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Mattel (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

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 American exchanges.

What are the risks and opportunities for Mattel?

Mattel, Inc., a children’s and family entertainment company, designs and produces toys and consumer products worldwide.

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  • Trading at 35.3% below our estimate of its fair value

  • Earnings are forecast to grow 13.52% per year


  • Debt is not well covered by operating cash flow

  • Profit margins (7.2%) are lower than last year (16.5%)

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