Spin Master Corp. (TOY.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

Spin Master Corp., a children's entertainment company, creates, designs, manufactures, licenses, and markets various toys, entertainment franchises, and digital games in North America, Europe, and internationally.Its product categories include activities, games and puzzles, and plush; preschool, dolls, and interactive; wheels and action; and outdoor.The company offers its products under the PAW Patrol, Bakugan, Kinetic Sand, Air Hogs, Hatchimals, Rubik's Cube, GUND, Toca Boca, Sago Mini, Etch A Sketch, Meccano, and Orbeez brands.

It also produced television, video-on-demand, subscription video-on-demand, and movies.The company was founded in 1994 and is headquartered in Toronto, Canada.

Show Full description

1.b. Last Insights on TOY

The recent 3-month performance of Spin Master Corp. was negatively impacted by a series of events. Analysts at RBC Capital Markets and TD Securities lowered their price targets on the company, citing concerns over its valuation. Additionally, the company's Q4 2024 earnings call highlighted challenges in the digital games and entertainment sectors, despite strong revenue growth of 18.8% in 2024. Furthermore, the announcement of a Normal Course Issuer Bid, which allows the company to repurchase its shares, may have been overshadowed by the overall market volatility and concerns over consumer spending.

1.c. Company Highlights

Last Price	20.5
Change Percentage	-1.20%
Open	20.86
Previous Close	20.75
Market Cap ( Millions)	2088
Volume	19788
Year High	34.96
Year Low	18.51
M A 50	19.88
M A 200	23.01

FCF Yield	18.76%
Dividend Yield	2.34%
ROE	6.54%
Debt / Equity	39.88%
Net Debt / EBIDTA	127.85%
Price To Book	1.14
Price Earnings Ratio	16.81
Price To FCF	5.33
Price To sales	0.66
EV / EBITDA	6.06

2. Spin Master's Q3 2025 Earnings: A Challenging Quarter Amidst Tariff-Induced Headwinds

Spin Master Corp.'s third-quarter 2025 revenue declined 17% due to a 20% drop in toy gross product sales (GPS), primarily caused by a shift in retailer buying patterns resulting from tariffs. The company's adjusted earnings per share (EPS) came in at $1.55, significantly beating estimates of $0.621. Despite the revenue decline, the company's point-of-sale (POS) performance was down only 1%, with market share growth in key categories like Preschool, Infant, Toddler, and Plush. Adjusted EBITDA, operating income, and net income declined due to reduced toy revenues.

Publication Date: Nov -17

                                    📋 Highlights
                                    Revenue Decline::
                                                Q3 2025 revenue fell 17% YoY, driven by a 20% drop in toy gross product sales (GPS) due to retailer buying shifts from tariffs.
POS Resilience::
                                                Point-of-sale (POS) performance declined only 1%, with market share growth in Preschool, Infant, Toddler, and Plush categories.
Supply Chain Diversification::
                                                China’s contribution to U.S. COGS is projected to drop from 64% (2024) to 30% (2026), reducing reliance on single-source manufacturing.
Digital Games Growth::
                                                Revenue increased via improved monetization in Toca Boca and Piknik, plus $10 million from a strategic partnership in Q3.
Q4 Efficiency Focus::
                                                Adjusted SG&A and CapEx reduced by $60M and $40M respectively from original budgets, targeting improved YoY financial performance in Q4.

                                

Segmental Performance

The Wheels & Action segment saw positive performance driven by Monster Jam and How to Train Your Dragon. In Entertainment, Spin Master delivered its first of five new PAW Patrol specials and greenlit its first original IP film. Digital Games saw growth in Toca Boca and Piknik, driven by improved monetization, with revenue improving due to a focus on ensuring profitability, subscriptions, and monetization.

Operational Highlights

The company has made strides in supply chain diversification, with China expected to represent approximately 30% of its U.S. cost of goods sold in 2026, down from 64% in 2024. Spin Master completed an acquisition of a digital reading and storytelling company for $20 million and plans to focus on building core learning skills in its Piknik bundle. The company invested in leasehold improvements, IT investments, and an acquisition of certain toy assets, recording strong operating cash flows.

Outlook and Guidance

For the fourth quarter, the company aims for an improvement in year-over-year financial results, driven by efficiency initiatives, including $60 million less in adjusted SG&A and $40 million less in CapEx than originally budgeted. Spin Master expects a less predictable and more spread-out shopping period during the holiday season. The company is optimistic about 2026, with a target of delivering operating leverage even in a flat sales year, and aims to grow top-line, with a focus on driving TSR.

Valuation

With a P/E Ratio of 15.92, P/B Ratio of 1.08, and EV/EBITDA of 5.81, the market appears to have factored in the challenges faced by the company. Analysts estimate next year's revenue growth at 4.8%. The company's ROE of 6.54% and ROIC of 5.71% indicate a decent return on equity and invested capital. The Net Debt / EBITDA ratio of 1.28 suggests a manageable debt burden. Free Cash Flow Yield of 19.81% is attractive, indicating a potential undervaluation.

3. NewsRoom

Wicked: For Good Casts Its Spell on Toca Boca™ World™

Nov -13

Source:

Spin Master (TSE:TOY) Is Due To Pay A Dividend Of $0.12

Nov -05

Source:

Stifel Canada Maintains Hold Rating on Spin Master After Q3

Oct -31

Source:

Spin Master Q3 Net Income Falls, But Still Beats Forecast, as Revenue Decrease

Oct -30

Source:

Spin Master (TSX:TOY): Assessing Valuation Following Recent Modest Share Price Recovery

Oct -28

Source:

Spin Master founders receive the EY Entrepreneur Of The Year® Ontario Lifetime Achievement Award of Excellence

Oct -28

Source:

Co-Founders of Open Farm named EY Entrepreneur Of The Year® 2025 Ontario

Oct -24

Source:

Spin Master and Elevation Pictures Are Bringing a New Animated Holiday Special, A PAW Patrol Christmas™ to a Theatre Near You

Oct -22

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.39%)

6. Segments

Pre-School and Dolls and Interactive

Expected Growth: 8%

Strong brand recognition, innovative products, and strategic licensing agreements drive growth in Pre-School and Dolls. Interactive segment benefits from increasing demand for educational toys and digital play experiences. Expansion into new markets, e-commerce growth, and successful product launches also contribute to the 8% growth rate.

Activities, Games and Puzzles and Plush

Expected Growth: 7%

Spin Master Corp's 7% growth in Activities, Games and Puzzles, and Plush segments is driven by increasing demand for educational toys, innovative product lines, and strategic licensing agreements. Additionally, expansion into emerging markets, e-commerce growth, and successful marketing campaigns have contributed to the company's growth momentum.

Wheels and Action

Expected Growth: 10%

Strong demand for Wheels and Action toys, driven by innovative products, strategic licensing agreements, and effective marketing campaigns. Additionally, Spin Master's focus on e-commerce and omnichannel retailing has expanded its customer reach, contributing to the 10% growth.

Sales Allowances

Expected Growth: 5%

Spin Master Corp's 5% sales allowances growth is driven by increasing popularity of its entertainment products, expansion into new markets, and strategic partnerships. The company's focus on innovation, particularly in the digital gaming space, has also contributed to the growth. Additionally, effective supply chain management and efficient inventory control have enabled Spin Master to maintain a competitive edge, further boosting sales.

Entertainment

Expected Growth: 11%

Spin Master Corp.'s Entertainment segment growth of 11% is driven by increasing popularity of its franchises such as Paw Patrol and Hatchimals, successful movie and TV show productions, expansion into new markets, and strategic licensing agreements. Additionally, the company's focus on digital media and e-commerce has contributed to the segment's growth.

Digital Games

Expected Growth: 12%

Strong demand for digital gaming experiences, particularly among children and young adults, drives Spin Master Corp.'s 12% growth in digital games. Additionally, the company's successful franchises, such as Bakugan and Air Hogs, contribute to the segment's growth. Furthermore, investments in e-sports and online gaming platforms, as well as strategic partnerships, enhance the company's digital offerings and attract new customers.

Outdoor

Expected Growth: 9%

Outdoor segment's 9% growth is driven by increasing consumer demand for outdoor play and recreation, fueled by rising health awareness and environmental concerns. Spin Master Corp.'s innovative products, such as outdoor toys and games, cater to this trend. Additionally, strategic partnerships and expanding distribution channels contribute to the segment's growth.

7. Detailed Products

Bakugan

A popular children's toy franchise that includes anime, manga, and video games

Air Hogs

A line of remote-controlled toys, including drones, planes, and cars

Meccano

A construction toy system that allows kids to build and create complex structures and machines

Paw Patrol

A popular children's entertainment franchise that includes toys, TV shows, and movies

Hatchimals

A line of toys that hatch from eggs, revealing a cuddly creature inside

Little Live Pets

A line of interactive pets that mimic real-life animals

Spin Master Games

A line of board games and puzzles for kids and adults

8. Spin Master Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Spin Master Corp. has a moderate threat of substitutes due to the presence of alternative toys and entertainment options for children. However, the company's strong brand portfolio and innovative products help to mitigate this threat.

Bargaining Power Of Customers

Spin Master Corp. has a low bargaining power of customers due to its strong brand recognition and diversified product offerings, which reduce the negotiating power of individual customers.

Bargaining Power Of Suppliers

Spin Master Corp. has a moderate bargaining power of suppliers due to its dependence on a few key suppliers for raw materials and components. However, the company's large scale of operations and diversified supply chain help to mitigate this risk.

Threat Of New Entrants

Spin Master Corp. has a low threat of new entrants due to the high barriers to entry in the toy industry, including significant capital requirements and the need for established distribution networks.

Intensity Of Rivalry

Spin Master Corp. operates in a highly competitive industry with several established players, leading to a high intensity of rivalry. The company must continually innovate and invest in marketing and advertising to maintain its market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	4.19%
Debt Cost	10.91%
Equity Weight	95.81%
Equity Cost	13.21%
WACC	13.12%
Leverage	4.38%

11. Quality Control: Spin Master Corp. passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Hasbro

A-Score: 5.6/10

Value: 5.7

Growth: 3.0

Quality: 4.1

Yield: 8.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

Planet Fitness

A-Score: 5.1/10

Value: 3.3

Growth: 6.7

Quality: 5.8

Yield: 0.0

Momentum: 7.5

Volatility: 7.7

1-Year Total Return ->

Spin Master

A-Score: 4.8/10

Value: 7.6

Growth: 5.2

Quality: 5.9

Yield: 3.0

Momentum: 1.0

Volatility: 6.3

1-Year Total Return ->

YETI

A-Score: 4.6/10

Value: 5.1

Growth: 8.1

Quality: 7.6

Yield: 0.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

Mattel

A-Score: 4.4/10

Value: 6.0

Growth: 5.1

Quality: 6.3

Yield: 0.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

Six Flags

A-Score: 3.6/10

Value: 7.5

Growth: 2.2

Quality: 3.4

Yield: 1.0

Momentum: 5.0

Volatility: 2.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-0.47%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

13.12%

Spin Master Corp. - CA8485101031

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TOY

1.c. Company Highlights

Less Volatile

Average Growth

Average Quality

Earnings Miss

Average Yield

Earnings Beats

Stable Momentum

Revenues Miss

Fairly Valued

Revenues Beats

Medium Volatility

Weak Momentum

2. Spin Master's Q3 2025 Earnings: A Challenging Quarter Amidst Tariff-Induced Headwinds

Segmental Performance

Operational Highlights

Outlook and Guidance

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.39%)

6. Segments

Pre-School and Dolls and Interactive

Expected Growth: 8%

Activities, Games and Puzzles and Plush

Expected Growth: 7%

Wheels and Action

Expected Growth: 10%

Sales Allowances

Expected Growth: 5%

Entertainment

Expected Growth: 11%

Digital Games

Expected Growth: 12%

Outdoor

Expected Growth: 9%

7. Detailed Products

Bakugan

Air Hogs

Meccano

Paw Patrol

Hatchimals

Little Live Pets

Spin Master Games

8. Spin Master Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Spin Master Corp. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.e Scoring ^Insights

12.f DCF ^BETA