Mattel, Inc. (NASDAQ: MAT) rose, following the Wall Street Journal report of approach from Hasbro, Inc. (NASDAQ: HAS)
The toymaker has seen annual sales decline like clockwork since 2013. Revenue of $6.48 billion in 2013 has waned to Wall Street expectations of just $5.09 billion in 2017.
And a company who as recently as 2013 earned $2.61 per share is expected to earn just seven cents a share for the full-year 2017. In October, Mattel stock suspended its dividend to free up cash.
The fortunes of HAS have been wildly different; EPS of $2.17 on revenue of $4.08 billion is expected to clock in at $4.83 per share and $5.35 billion, respectively, in 2017.
In short, the decision to merge Hasbro, known for its brands such as Nerf, Transformers, and My Little Pony, and Mattel, known for Barbie, American Girl dolls and Fisher-Price, makes sense for an industry where consolidation makes a whole lot of sense.
A merger of Hasbro and Mattel would make a stronger united company, and give it more power with which to ward off the likes of Amazon, which is why the market is making the (on the surface, at least) unusual decision to reward HAS stock Monday.
With all that said, it's important for investors to remember, in situations like these, that speculating on shares of Hasbro or Mattel at this time is just that: speculation.
Mattel jumped Monday by $2.90, or 19.8%, to $17.52, while Hasbro stock vaulted $5.13, or 5.6%, to $96.58.
