Toy manufacturing and entertainment company (NASDAQ: MAT) reported Q2 CY2026 results exceeding the market’s revenue expectations, with sales up 10.5% year on year to $1.13 billion. Its non-GAAP profit of $0.01 per share was 77.3% below analysts’ consensus estimates.
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Mattel (MAT) Q2 CY2026 Highlights:
- Revenue: $1.13 billion vs analyst estimates of $1.10 billion (10.5% year-on-year growth, 2.4% beat)
- Adjusted EPS: $0.01 vs analyst expectations of $0.04 (77.3% miss)
- Adjusted EBITDA: $95.5 million vs analyst estimates of $107.3 million (8.5% margin, 11% miss)
- Management reiterated its full-year Adjusted EPS guidance of $1.33 at the midpoint
- Operating Margin: 1%, down from 8.4% in the same quarter last year
- Free Cash Flow was -$239.8 million compared to -$339.9 million in the same quarter last year
- Market Capitalization: $4.32 billion
Company Overview
Known for the creation of iconic toys such as Barbie and Hotwheels, Mattel (NASDAQ: MAT) is a global children's entertainment company specializing in the design and production of consumer products.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Mattel grew its sales at a weak 1.2% compounded annual growth rate. This fell short of our benchmarks and is a poor baseline for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Mattel’s recent performance shows its demand has slowed as its revenue was flat over the last two years. 
This quarter, Mattel reported year-on-year revenue growth of 10.5%, and its $1.13 billion of revenue exceeded Wall Street’s estimates by 2.4%.
Looking ahead, sell-side analysts expect revenue to grow 5.3% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.
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Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Mattel’s operating margin has been trending down over the last 12 months and averaged 10.8% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.
In Q2, Mattel’s breakeven margin was 1%, down 7.5 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Mattel, its EPS declined by 3.2% annually over the last five years while its revenue grew by 1.2%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.
In Q2, Mattel reported adjusted EPS of $0.01, down from $0.19 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Mattel’s full-year EPS to grow 27% from $1.09 to $1.38.
Key Takeaways from Mattel’s Q2 Results
It was encouraging to see Mattel beat analysts’ revenue expectations this quarter. On the other hand, its EPS missed and its EBITDA fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $14.95 immediately after reporting.
Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
