Mattel Analysis
Mattel Group Equity Valuation
Jeremy Gilbert Angela Gorczyca Michael Innerebner Erin Kunselman Andrew Mead
Mattel Valuation
TA B LE OF CONT ENTS
Executive Summary.................................................. 3 Business & Industry Analysis................................... 6
Industry Analysis .............................................................6 Five Forces Model...........................................................7 SWOT Analysis ...............................................................9 Competitive Strategy Analysis .....................................10
Accounting Analysis ................................................ 11
Accounting Analysis Steps ...........................................11 Screening Ratios ............................................................16
Ratio Analysis & Forecast Financials......................17
Financial Ratio Analysis................................................17 Cross Sectional (Benchmark) Analysis .......................20 Financial Statement Forecasting Metholdology ........27
Valuations Analysis..................................................32
Method of Comparables...............................................33 Free Cash Flow & Discounted Dividends .................34 Discounted Residual Income.......................................39 Long Run Residual Income .........................................40 Abnormal Earnings Growth........................................41
Appendix..................................................................44
2
Executive Summary
Executive Summary
MAT
Date: December, 2004
Mattel, Inc. (NYSE)
Industry: Recreational Products
Business Summary: Mattel is one of the leading toy manufacturers and sellers in the world. Producing hundreds of thousands of toys each year, Mattel has earned five billion dollars in revenue last year (2003) and 4.9 billion the previous year (2002). Some of Mattel’s well-known products
Jeremy Gilbert Angela Gorczyca Michael Innerebner Erin Kunselman Andrew Mead
Mattel Valuation
TA B LE OF CONT ENTS
Executive Summary.................................................. 3 Business & Industry Analysis................................... 6
Industry Analysis .............................................................6 Five Forces Model...........................................................7 SWOT Analysis ...............................................................9 Competitive Strategy Analysis .....................................10
Accounting Analysis ................................................ 11
Accounting Analysis Steps ...........................................11 Screening Ratios ............................................................16
Ratio Analysis & Forecast Financials......................17
Financial Ratio Analysis................................................17 Cross Sectional (Benchmark) Analysis .......................20 Financial Statement Forecasting Metholdology ........27
Valuations Analysis..................................................32
Method of Comparables...............................................33 Free Cash Flow & Discounted Dividends .................34 Discounted Residual Income.......................................39 Long Run Residual Income .........................................40 Abnormal Earnings Growth........................................41
Appendix..................................................................44
2
Executive Summary
Executive Summary
MAT
Date: December, 2004
Mattel, Inc. (NYSE)
Industry: Recreational Products
Business Summary: Mattel is one of the leading toy manufacturers and sellers in the world. Producing hundreds of thousands of toys each year, Mattel has earned five billion dollars in revenue last year (2003) and 4.9 billion the previous year (2002). Some of Mattel’s well-known products