Can JAKKS Pacific, Inc. Exceed Its September 2022 All-Time Highs?

The stock market can be a fickle beast, as evidenced by the recent tumultuous ride of JAKKS Pacific, Inc. (JAKK: Nasdaq). After reaching a record high of $27.87 on September 12, 2022, the stock plummeted to $16.79 on October 28, causing consternation among investors. In the ensuing months, the stock price experienced a series of ups and downs, eventually bottoming out around $14 in March 2023 before surging to $21, where it currently hovers.

Despite its recent turbulence, JAKKS Pacific, Inc. remains a stock worthy of examination. It currently ranks 23rd in the VectorVest Stock Viewer out of 9,143 stocks, indicating that it has potential for growth. Moreover, the company has an impressive history, having been incorporated in 1995 and employing 622 full-time employees. JAKKS Pacific, Inc. is renowned for its design, production, distribution, and marketing of toys, costumes, and children’s furniture on a global scale. The company also produces action figures, dolls, and other novelty items, leveraging both an in-house sales staff and independent sales representatives to sell to its customers, including retail chain and department stores, club stores, and wholesalers, among others.

Despite a recent earnings miss in the fourth quarter of 2022, JAKKS Pacific, Inc. has exhibited solid earnings growth in the preceding quarters, with consensus EPS beating estimates by an impressive $0.88 to $2.63. Although the recent earnings miss contributed to a sharp sell-off, causing concern among investors, the stock has rebounded by 50%, indicating that the market has confidence in the company’s long-term prospects. Notably, the company’s next earnings report is due on April 27, 2023, and stakeholders eagerly await the results.

JAKKS Pacific, Inc. has a current market cap of $206 million and an extremely low P/E ratio of 4.41, substantially lower than the average VectorVest stock, which boasts a P/E ratio of 48.06. Furthermore, the company has forecasted earnings per share of $4.79 for the year ahead, demonstrating potential for growth. Although only 88 institutions hold 44% of the shares, with Arcadian Asset Management, LLC, Morgan Stanley, and The Vanguard Group holding 3% each, insiders hold a 28% stake, a clear indication of their confidence in the company’s future prospects. It should be noted that the company does not pay a dividend.

JAKKS Pacific, Inc. is ranked #1 in its universe of 5 Leisure (Toys/Games) sector stocks, as well as #1 out of 172 stocks in the general Leisure sector, reflecting the company’s leading standing in this category. With a strong forecasted earnings growth rate of 28% over the next year and consistent year-over-year earnings growth, the company’s high rankings are well deserved. However, it is important to note that the Leisure sector is ranked 31st out of 40 sectors on a Relative Timing (RT) measurement, indicating that it is in the bottom quartile. While this ranking does not necessarily preclude individual stocks such as JAKKS Pacific, Inc. from rising in price based on their individual merits, investors should be aware of the potential risks.

JAKKS Pacific, Inc.’s stock price has been above its 40-day moving average for the past twelve days, but has crossed below and above it four times since mid-September 2022, indicating investor indecision. However, a positive MACD crossover on March 29, 2023, and a positive RT ranking on April 5 have bolstered investor confidence.

JAKK Presents Good VectorVest Scores, Is Undervalued, But Has Below Average Safety

Consider VectorVest’s JAKK’s key metrics:

• Excellent Upside Potential: The Relative Value (RV) rating focuses on a stock’s long-term, three-year price appreciation potential. The current RV rating for JAKK is 1.41 which is higher than the average on a scale of 0.00-2.00. VectorVest’s current value of this stock is $27.30 and its current price is $21.13; therefore it is undervalued which is a positive characteristic.
• Poor Safety: The Relative Safety (RS) rating is based on the company’s business longevity, financial predictability/consistency, debt-to-equity ratio, and additional risk parameters, including price volatility. Its RS rating of 0.85 is below average, indicating above average risk.
• Excellent Timing: The Relative Timing (RT) rating focuses on the price trend over the short, medium, and long term. The components include price direction, dynamics, and price magnitude of price changes over daily, weekly, quarterly, and yearly comparisons. JAKK has a significantly high RT rating of 1.68 compared to the average 0.87 RT of all the stocks in the database which means that the stock has been performing well above average for multiple timeframes.
• Fair Comfort Index: This index measures the consistency of a stock’s long-term resistance to severe and lengthy corrections. This index compares the individual stock to the fluctuation of the VectorVest Composite price that is measured on a scale of 0 to 2.00. At a level of 1.03 JAKK’s rating is minimally above average. Therefore, this stock is more suitable for aggressive risk-oriented investors, and not conservative investors.
• Excellent Earnings Growth Rate (GRT): JAKK’s respectable 27%forecasted growth rate is measured over a forecasted three-year period. This fundamental factor is calculated in the VectorVest software, so you don’t have to do the work. The chart below highlights the positive trending earnings.
• Very Good VST Score: The VST Master Indicator ranks 9,143 stocks from high to low and brings stocks with the highest VST scores to the top of the list. JAKK’s exceptional above-average score is 1.37. Using VST enables users to identify stocks that are performing much better than average, as well as the opportunity to find the cream of the crop in all its critical criteria with a few mouse clicks. This stock is currently in that category, but because of its volatility, stop orders should be placed as soon as the stock is purchased to avoid big losses.

Considering the Vector Vest evaluation of the key metrics, this stock is certainly one of the “Top 10 Percent” in their universe. Therefore, think about placing JAKK on your watchlist for a potential buying opportunity after doing your due diligence, and only when the overall VectorVest stock market signal is “bullish”.

Remember that the company’s earnings release and conference call for the 2023 first quarter results will occur on April 27, so listen in if you are considering this stock for purchase. No need to buy early and then take a hit if there are disappointing results.

Determine whether VectorVest continues to rank this stock as a buy after the earnings release. To check out JAKK’s recommendation on April 28 analyze it for free using VectorVest.

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