27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Mattel Inc (NASDAQ:MAT) reported second-quarter sales and EBITDA ahead of expectations. The company’s operating cash flow in the quarter was disappointing and its free cash flow could turn negative for 2019, according to DA Davidson.
The Analyst
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!
DA Davidson’s Linda Bolton Weiser maintained a Neutral rating on Mattel while lowering the price target from $13.50 to $13.
The Thesis
Mattel reported second-quarter net sales at $860 million, significantly higher than the consensus estimate of $822 million. In constant currency terms, net sales grew 5% and gross sales were up 4%, Bolton Weiser said in the note.
The company’s EBITDA came in positive, at $42 million, much better than the consensus expectation of a loss of $6 million. The analyst noted operating cash flow was negative, at -$208 million, versus DA Davidson’s estimate of -$189 million.
Mattel achieved cost savings of $754 million, exceeding its year-end target of $650 million. Management expects an additional $100 million in cost savings in the back half of the year. Although the company is identifying more opportunities to cut cost, future savings are likely to come from ongoing productivity initiatives, Bolton Weiser mentioned.
Moreover, the company reinvested only $27 million in the first half of 2019, versus its plan of $90 million for the entire year. Given the higher-than-expected cost savings and lower-than-expected reinvestment, “we are surprised that operating profit beat our estimate by only $12M in 2Q19,” the analyst wrote. She added that the sales boost from "Toy Story 4" has been underwhelming.
Price Action
Shares of Mattel were up 12.7% to $14.10 at time of publishing.
Related Link:
Toying With Tariffs: Trade War With Mexico Could Hurt Mattel, While China Spat Affects Hasbro
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.