This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

JAKKS Pacific; Callaway Golf Comeback Could Be in the Works

NEW YORK ( TheStreet) Many earnings-season issues worry me. One is the constant focus on beating consensus estimates for a three-month period of operations, translating into very short-term thinking for companies and investors. The other side of that coin is: When investors overreact to short-term noise it creates market inefficiencies, which sometimes provide buying opportunities.

One of the things I like about earnings season is seeing reporting results from challenged companies, giving the notion of a possible turnaround. Now, one quarter does not a turnaround make, but it might just be a start.

Late last week, interesting earnings releases from troubled toy company, JAKKS Pacific (JAKK - Get Report), and long-suffering, high-end golf club maker Callaway Golf (ELY - Get Report) were released. JAKKS, which fell from $19 to $4.50 within the past 18 months, had been putting up some terrible numbers the past few quarters -- including a 27% slide in revenue and a $47 million loss in the second quarter of 2013.

Consensus estimates were calling for earnings of five cents for the quarter; JAKKS lost $2.14 per share. Between July and October, shares fell 61%. Even I, bottom-fishing dumpster-diver I am, was not comfortable taking a position in JAKKS, which was then trading in the $7 range.

Last Wednesday's third-quarter surprise sent shares back to the $7 range. For the quarter, revenue fell 1% to $311 million which was above the $298 million consensus. The company earned $36.6 million, or $1.11 per share, six cents better than consensus estimates.

JAKKS attributed the better-than-expected quarter to strong sales of Disney Princess dolls, and cost-cutting measures, one being the 10% cutting of its workforce in July. While there was some good in this report, it's not enough to entice me to take a position. The company still has a long road back to full-year profitability, and the balance sheet, while not bad, is no longer as attractive. Over the past year, cash has fallen from $140.8 million to $51.5 million, while total debt has fallen from $148 million to $138 million.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ELY $9.28 0.00%
JAKK $7.17 0.00%
AAPL $93.24 0.00%
FB $117.81 0.00%
GOOG $701.43 0.00%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs