Summer Infant (NASDAQ: SUMR) and Mattel (NASDAQ:MAT) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitabiliy and dividends.

Profitability

This table compares Summer Infant and Mattel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Summer Infant -1.82% 0.56% 0.09%
Mattel 4.51% 11.62% 4.20%

Valuation and Earnings

This table compares Summer Infant and Mattel’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Summer Infant $194.00 million 0.18 $6.82 million ($0.19) -9.84
Mattel $5.34 billion 1.18 $690.60 million $0.69 26.67

Mattel has higher revenue and earnings than Summer Infant. Summer Infant is trading at a lower price-to-earnings ratio than Mattel, indicating that it is currently the more affordable of the two stocks.

Dividends

Mattel pays an annual dividend of $1.52 per share and has a dividend yield of 8.3%. Summer Infant does not pay a dividend. Mattel pays out 220.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of recent ratings and price targets for Summer Infant and Mattel, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Summer Infant 0 0 2 0 3.00
Mattel 1 5 6 0 2.42

Summer Infant currently has a consensus target price of $2.75, suggesting a potential upside of 47.06%. Mattel has a consensus target price of $25.41, suggesting a potential upside of 38.09%. Given Summer Infant’s stronger consensus rating and higher probable upside, equities analysts clearly believe Summer Infant is more favorable than Mattel.

Risk and Volatility

Summer Infant has a beta of -0.11, indicating that its stock price is 111% less volatile than the S&P 500. Comparatively, Mattel has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Insider & Institutional Ownership

50.0% of Summer Infant shares are held by institutional investors. Comparatively, 91.8% of Mattel shares are held by institutional investors. 8.4% of Summer Infant shares are held by insiders. Comparatively, 0.9% of Mattel shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Mattel beats Summer Infant on 11 of the 15 factors compared between the two stocks.

Summer Infant Company Profile

Summer Infant, Inc. is an infant and juvenile products company. The Company is engaged in the juvenile industry, providing mothers and caregivers a range of products to care for babies and toddlers. As of December 31, 2016, it marketed over 1,100 products in several product categories, including monitoring, safety, nursery, baby gear and feeding products. It markets its products, under its Summer Infant, SwaddleMe and Born Free brand names. Its anchor products in its product categories include monitoring, such as wireless fidelity (Wi-Fi)/Internet, video, audio and prenatal; safety, including gates, bath, potties, boosters and positioners; nursery, such as swaddle, travel accessories, safe sleep, soothers and sleep aides; baby gear, including strollers, bassinets, high chairs and playards, and feeding products, such as bottles, drinking cups, bibs and placemats, electronics and pacifiers. It sells its products across the globe to national retailers, as well as independent retailers.

Mattel Company Profile

Mattel, Inc. manufactures and markets a range of toy products around the world. The Company’s segments are North America; International, and American Girl. Its portfolio of brands and products are grouped into approximately four major brand categories, including Mattel Girls & Boys Brands, Fisher-Price Brands, American Girl Brands and Construction and Arts & Crafts Brands. The Mattel Girls & Boys Brands category includes Barbie fashion dolls, Monster High, Disney Classics, Ever After High, Little Mommy, and Polly Pocket, Hot Wheels and Matchbox vehicles and play sets, and CARS, Disney Planes, BOOMco, Toy Story, Max Steel, WWE Wrestling and DC Comics. The Fisher-Price Brands category includes Fisher-Price, Little People, BabyGear, Laugh & Learn, Imaginext, Thomas & Friends, Blaze and The Monster Machines, Shimmer and Shine, Mickey Mouse Clubhouse, Minnie Mouse, Octonauts, and Power Wheels. The Construction and Arts & Crafts Brands category includes MEGA BLOKS, RoseArt and Board Dudes.

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