|Market Cap||$358.6 million|
|Average Daily Volume||103,000|
|Company Web Site||www.topps.com|
|*Based on 2003 Source: Value Line, Company Reports, TSC Research|
The trading-card business has changed, and Topps -- like so many other companies faced with outside challenges -- was slow to respond. There are no more wax packs and certainly no more bubble gum in trading cards. The quality of offerings from groups like Upper Deck has also created intense competitive pressure. Plus, the competition for rights of certain athletes has become big business, likely putting pressure on margins in coming seasons. Topps found a real savior several years ago when it began producing Pokemon cards. However, fads fade and so do their sales. Although Topps had $180 million in Pokemon sales in 2000, that number dropped to $24 million in 2001 and a paltry $6 million last year.
Virtual Cards and Virtual GrowthTopps has launched an online offering, eTopps, which many analysts believe holds promise. However, it's not yet profitable and, like other online media, faces the challenge of finding the right revenue mix. But in a world that is increasingly becoming virtual in almost every aspect, virtual trading cards could give Topps an edge on new innovations in the business. Still, the company faces an uphill battle to grow its core business in the months ahead. With growth in both the collectibles and candy business expected to be in the single digits, it's hard to argue that Topps deserves its current multiple.
|Not in the Cards |
Topps' growth is tough to grasp
|Year||Revenue (in millions)||Earnings Per Share|
|Source: Value Line, Company Reports, TSC Research|
The company does have a clean balance sheet and has been repurchasing its own stock, which has provided support for the share price. The company bought back more than 1.5 million shares last year and has authorization to repurchase up to 2.6 million shares. With plenty of cash, those repurchases will probably continue. Believe me, I want to like Topps because the name brings back great childhood memories. But the world changes and Topps has struggled to change with it. With earnings growth dependent on entertainment fads and the next sports star, this is a tough small-cap to play, unless you can predict when the next entertainment hit will turn into a cult-like trading-card fad. When that happens, Topps might become a buy. I'm giving it one barrel. (For an explanation of our barrel rating system,
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