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Spin Master Corp Shs Subord Voting TOY

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Morningstar’s Analysis

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Demand Robust for No-Moat Spin Master's Products; Entertainment and Digital Sales Lift Outlook

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

We plan to raise our CAD 33 fair value estimate for Spin Master by a high-single-digit rate after incorporating second-quarter financial results that included gross product sales that rose 27%, to $359 million, and entertainment and digital (16% of mix) sales growth of 126%. That said, we view the shares as rich, trading at more than 30 times our 2022 EPS estimate. Spin Master held its 2021 outlook for high-single-digit gross product sales growth, implying a slowdown from the first half’s 25% to about flat year over year in the second half. However, given the strong showing in digital, the firm increased its total revenue growth outlook to the midteens (from the low double digits prior). As such, we plan to lift our 12% total sales growth forecast by raising our entertainment and digital sales growth estimate above 50%.

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Company Profile

Business Description

Spin Master is a children’s entertainment company operating in the roughly $100 billion global toy industry. The company creates, designs, manufactures, and markets a portfolio of products, brands, and entertainment properties across five key categories (outdoor, remote control and interactive, boys action and construction, preschool and girls, and activities games and puzzles and plush). Spin Master has increased brand awareness via homegrown brands including Paw Patrol, Rusty Rivets, and Bakugan but has leaned on a robust acquisition strategy to reach adjacent markets through tie-ups like Rubik's, Swimways, and Cardinal Games. The company has global reach, with 28 offices and sales in over 100 markets.

225 King Street West, Suite 200
Toronto, ON, M5V 3M2, Canada
T +1 416 364-6002
Sector Consumer Cyclical
Industry Leisure
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 2,000