Curious if Mattel stock is actually a hidden gem or just another toy in the market? Let's break down what is really driving the current buzz around its value.
Mattel's share price has made some impressive moves lately, rising 6.5% over the past week and 14.9% in the last month. This hints at shifting sentiment and new opportunities.
Industry chatter has picked up as Mattel rolled out fresh licensing deals and innovation initiatives, capturing investor interest and potentially sparking the stock's recent gains. Headlines have highlighted the company's collaborations with major entertainment brands and its push into digital experiences. This offers context for the heightened activity.
On the valuation front, Mattel currently scores a 5 out of 6, meaning it is undervalued by most key metrics. We will dive into what this score really means and how the usual valuation checks stack up. There is also an even smarter way to approach Mattel's true worth coming up later in this article.
Mattel delivered 11.0% returns over the last year. See how this stacks up to the rest of the Leisure industry.
Approach 1: Mattel Discounted Cash Flow (DCF) Analysis
The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting them back to today's value. This approach provides investors with insight into the company's estimated worth based on its potential to generate cash in the future.
For Mattel, the most recent Free Cash Flow reported is $477.9 million. Analysts forecast steady growth, projecting Free Cash Flow to reach about $604.4 million by 2027. Over the next ten years, projections provided by Simply Wall St suggest this figure could climb even higher, driven by incremental annual growth. However, only the next five years are based on direct analyst estimates.
When this future stream of cash flows is brought back to present value using the DCF model, the estimated intrinsic value for Mattel is $46.21 per share. With Mattel's current share price reflecting a 54.3% discount to this intrinsic value, the market appears to be significantly undervaluing the stock according to this analysis.
In summary, the DCF model indicates that Mattel shares may offer considerable upside potential relative to their current trading price.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Mattel is undervalued by 54.3%.