Why JAKKS Pacific (JAKK) Stock Is Higher On Friday

NEW YORK (TheStreet) -- Shares of JAKKS Pacific Inc. (JAKK) are higher by 4.45% to $7.64 on Friday morning following a ratings upgrade to "buy" from "hold" at Needham and Co.

The firm said it raised its rating on the toy and related products company based on its growth in sales momentum, operating leverage, and a strong financial position.

Must ReadWarren Buffett's 25 Favorite Stocks 

Separately, TheStreet Ratings team rates JAKKS PACIFIC INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate JAKKS PACIFIC INC (JAKK) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for JAKKS PACIFIC INC is currently lower than what is desirable, coming in at 29.87%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.76% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$11.05 million or 94.64% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio of 1.12 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, JAKK's quick ratio is somewhat strong at 1.25, demonstrating the ability to handle short-term liquidity needs.
  • JAKK has underperformed the S&P 500 Index, declining 15.66% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Leisure Equipment & Products industry and the overall market, JAKKS PACIFIC INC's return on equity significantly trails that of both the industry average and the S&P 500.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more

More from Markets

Apple and GE Switch Roles; Musk's Super Control of Tesla Explained -- ICYMI

Apple and GE Switch Roles; Musk's Super Control of Tesla Explained -- ICYMI

Trump May Be More to Blame For Higher Oil Prices Than OPEC

Trump May Be More to Blame For Higher Oil Prices Than OPEC

Dow Falls Over 200 Points as Apple's Slump Offsets Gains in General Electric

Dow Falls Over 200 Points as Apple's Slump Offsets Gains in General Electric

Week Ahead: Major Earnings on Tap as Wall Street Readies for Geopolitical Moves

Week Ahead: Major Earnings on Tap as Wall Street Readies for Geopolitical Moves

3 Hot Reads From TheStreet's Top Premium Columnists

3 Hot Reads From TheStreet's Top Premium Columnists