Mattel, Inc.MAT reported third-quarter 2026 results, with adjusted earnings surpassing the Zacks Consensus Estimate but net sales missing the same. Both top and bottom lines improved year over year, supported by higher gross margins and growth in Vehicles and Games. Following the results, the company's shares declined 5.8% in after-hours trading yesterday.
The company posted adjusted earnings of $1.30 per share, up 42.9% from 91 cents a year earlier. The figure beat the Zacks Consensus Estimate of 94 cents per share by 38.3%. Net sales increased 4% year over year to $1.81 billion but missed the consensus mark of $1.85 billion by 2.5%.
MAT's Sales Rise Across Geographic Markets
North America net sales increased 4% year over year to $1.01 billion. Gross billings advanced 4% to $1.11 billion, supported by growth in Vehicles, Dolls and Action Figures, Building Sets, Games and Other.
North America Vehicles gross billings increased 10% to $304.8 million, while Dolls rose 6% to $416.1 million. Action Figures, Building Sets, Games and Other advanced 12% to $260.3 million. However, Infant, Toddler and Preschool gross billings declined 21% to $124.4 million.
Mattel, Inc. Price, Consensus and EPS Surprise
Mattel, Inc. price-consensus-eps-surprise-chart | Mattel, Inc. Quote
Mattel's International Business Posts Broad Growth
International net sales increased 5% year over year to $792.7 million, reflecting 3% growth in constant currency. International gross billings rose 5% as reported and 3% in constant currency to $949 million.
EMEA net sales increased 2% to $431.1 million, while Latin America advanced 4% to $240.4 million. Asia Pacific delivered the strongest regional growth, with net sales rising 17% to $121.2 million. In constant currency, EMEA increased 3%, Latin America declined 3% and Asia Pacific advanced 15%.
MAT's Vehicles and Games Categories Drive Growth
Worldwide Vehicles gross billings increased 9% as reported and 7% in constant currency to $679.8 million, primarily driven by Hot Wheels. The brand's gross billings rose 7% to $585.5 million, reflecting continued demand for the company's leading Vehicles franchise.
Action Figures, Building Sets, Games and Other gross billings increased 12% as reported and 11% in constant currency to $450.8 million. Growth was primarily driven by Games, including contributions from Mattel163, and Action Figures. These categories remained important contributors to the company's portfolio performance.
Mattel's Dolls Grow While Preschool Sales Decline
Worldwide Dolls gross billings increased 4% year over year to $703.2 million, supported by partner brands, including KPop Demon Hunters. However, Barbie remained under pressure, with gross billings declining 9% as reported and 10% in constant currency to $374.6 million.
Infant, Toddler and Preschool gross billings declined 16% as reported and 17% in constant currency to $220.8 million, primarily reflecting weakness in Fisher-Price. The brand's gross billings fell 14% to $186.2 million, highlighting persistent challenges in the preschool portfolio.
MAT's Margins Expand on Tariff Refunds
Adjusted gross margin expanded 480 basis points year over year to 55%, primarily reflecting $88 million in tariff refunds. Inflation and higher royalties more than offset other benefits, including contributions from Mattel163, cost savings and favorable foreign exchange.
Advertising and promotion expenses increased 21% to $143.3 million. However, adjusted selling and administrative expenses declined 2% to $349.2 million. Adjusted operating income increased 27% to $501.6 million, while adjusted operating margin expanded 500 basis points to 27.8%. Adjusted EBITDA rose 16% to $542.5 million.
Mattel's Cash Position Declines Amid Investments
For the first nine months of 2026, cash flows used for operating activities were $113.5 million, compared with $203.3 million a year earlier. The improvement reflected favorable working capital, partly offset by lower net income excluding noncash items. Investing cash outflows increased to $249.9 million from $97.5 million, primarily reflecting the Mattel163 acquisition and higher capital expenditures.
Mattel ended the quarter with $541.4 million in cash and equivalents, $828 million in inventories and $2.34 billion in long-term debt. The company repurchased $308 million of shares during the first nine months, with approximately $1.2 billion remaining under its existing authorization.
MAT Cuts 2026 Earnings and Revenue Outlook
Management lowered its 2026 outlook, projecting constant-currency net sales growth of 1% to 4%, down from the previous 3% to 6%. Adjusted gross margin is now expected to be approximately 48%, down from the earlier projection of 50%.
Adjusted operating income is forecasted at $500 million to $570 million, down from the previous range of $580 million to $630 million. Mattel now expects adjusted earnings of $1.05-$1.20 per share, down from $1.27-$1.39. The revised guidance excludes tariff-refund benefits recognized year to date and any additional refunds during the remainder of 2026.
MAT's Zacks Rank & Key Picks
MAT currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Zacks Consumer-Discretionary sector are Cinemark Holdings, Inc.CNK, AMC Entertainment Holdings, Inc.AMC and Hasbro, Inc.HAS.
Cinemarkpresently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Cinemark stock has surged 72.3% in the year-to-date period. The Zacks Consensus Estimate for CNK's 2026 sales and EPS implies growth of 17.7% and 155.8%, respectively, from the year-ago levels.
Hasbrocurrently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings beat of 55.9%, on average. Hasbro stock has gained 45.8% in the year-to-date period.
The Zacks Consensus Estimate for Hasbro's 2026 sales and EPS indicates growth of 9.6% and 20.8%, respectively, from the year-ago period's levels.
AMC Entertainmentpresently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 321.7%, on average. AMC Entertainment stock has rallied 97.5% in the year-to-date period.
The Zacks Consensus Estimate for AMC Entertainment's 2026 sales and EPS indicates an increase of 18.8% and 91.7%, respectively, from the year-ago levels.
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This article originally published on Zacks Investment Research (zacks.com).
