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Click here to find out more » FotografiaBasica/iStock Unreleased via Getty Images Investment Thesis JAKKS Pacific, Inc. ( NASDAQ: JAKK ) has undergone a turnaround and restructuring since 2019. Since then, the company has turned from a negative cash flow in 2017-2020 to a positive one in the last two to three years.
The management has used the generated cash to de-lever the company. Although by looking at past numbers, the company looks undervalued, we don’t have enough evidence that the turnaround is completed, and the company is in a safe place. We recommend a “Hold” rating on this stock and continue observing: a) How the management is going to do the future capital allocation and b) Sales to stabilize and be more predictable.
Company Overview Jakks Pacific is a leading multi-product line, multi-brand toy company that designs, produces, markets, sells, and distributes toys and related kid-targeted consumer products. The company was founded in 1995 by Jack Friedman, Stephen Berman, and Joseph Reth. Mr.
Stephen Berman has been the CEO since 2010. In the early years, Jakks used M&A for its growth. They acquired multiple companies in the early days and currently, more than 50% of their assets are gaine.
