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After Mattel posted an 11% drop in it's sales figures on Wall Street yesterday Hasbro's shares also dropped (even though they haddn't posted any figures).
Seeking Alpha reports
Everyone knows or knows someone who knows a “Debbie Downer.” That acquaintance or friend that just won’t let you have a good time. They always seem to pull the good times down and ruin the party for the rest of us.
You can find Debbie Downers in the stock market as well. Today’s example is Mattel (NYSE: MAT). After it reported lower earnings and an 11% drop in sales, it dragged Hasbro (NYSE: HAS) down with it.
The reasoning behind most of these moves is that the pressures hurting one company in a sector should be impacting the competition as well.
But that isn’t always the case.
We can find numerous examples of companies in the same industry with the same pressures that deal with those challenges differently. Southwest Airlines (NYSE: LUV) was able to put up considerable numbers over the past year as its competition suffered greatly. It did this by hedging its oil costs correctly.
Maybe Hasbro hasn’t done the exact same thing as Mattel – and will report similar earnings figures? But who’s to say they did. As smart investors, we cannot assume that is the case. As of this writing, Mattel is down 16% and Hasbro is down 9%.
Let's think about that, a 9% percent drop on no information about their business model. It’s the kind of emotional movement that value investors love.

Hasbro Inc and Mattel both released their first quarter figures this afternoon (this morning in America) with forecasts fair even performance for both companies, but with Hasbro receiving the higher increase in profits. Well the official figures are in, shocking some forecasters, as whilst Hasbro's profits rose by 14%, Mattel reported a loss of $46.6 Million
Reuters report that "The maker of Monopoly board games said first-quarter profit
climbed to $37.5 million, or 25 cents a share, from $32.9
million, or 19 cents a share, a year earlier.
Quarterly sales rose 13 percent to $704.2 million from
$625.3 million.
Analysts on average were expecting earnings of 14 cents a
share on $582.2 million in sales, according to Reuters
Estimates.
Hasbro said sales climbed 6 percent in the United States
and Canada and 22 percent internationally."
AP Business Wire reported "The toymaker Hasbro Inc. said Monday its earnings rose 14 percent in
the first quarter on growth in brands such as Transformers and Littlest
Pet Shop.
The world's second biggest toy company said it earned $37.5
million, or 25 cents per share, for the three months ended March 30, up
from $32.9 million, or 19 cents per share, during the same quarter a
year ago.
The results beat the expectations of analysts polled by Thomson Financial, who forecast net income of 14 cents per share.
Sales grew 13 percent to $704.2 million from $625.3 million a year ago.
The
company said international revenue rose 22 percent to $248.3 million,
while revenue in the U.S. and Canada segment grew 6 percent to $428.5
million.
Hasbro released the results as its chief rival, Mattel
Inc., said it lost $46.6 million, or 13 cents per share, missing
analysts' expectations of a profit of a penny per share. The El
Segundo, Calif.-based maker of Barbie dolls and Fisher-Price toys
blamed higher product costs and legal fees."

With Mattel featuring a backlash due to safety concerns on various of their products, Hasbro are now stepping up testing in their Chinese factories.
Here's a snippet of a story currently running on
Yahoo Business News
Hasbro does not own any toy plants in China and relies entirely on contractors for its production there. Mattel owns five Chinese toy factories, but not Lee Der Industrial Co., which made the 1.5 million preschool toys that were recalled across the globe earlier this month.
Most of Hasbro's toys are made in China; Wedbush Morgan Securities analyst Sean McGowan said this fact may actually help the maker of Transformers and Star Wars action figures prevent tainted toys from ever reaching a child's hands.
"Knowing that they are more vulnerable, they have put in layers of testing that they might not have if they weren't using contract manufacturers," McGowan said.
"It may happen at some point that Hasbro or some other company winds up with a manufacturing issue, but they feel pretty confident that they've got the kinds of systems in place that would catch anything."
Under its new "three-point" check system, Mattel said it would require every batch of paint at each of its vendors to be tested and said it would increase the number of random inspections of its factories. The toy maker also said it would test each production run of its toys.
Jim Silver, editor-in-chief of Toy Wishes magazine, said every major toy company is taking a hard look its manufacturing to ensure there are no problems for the holiday season, the most crucial selling period for toy companies.
"All the major companies are overseas right now looking at their factories and literally testing like they've never tested before," Silver said. "Everybody is over there checking. Nobody really wants an issue for the fourth quarter and they realize the importance of meeting all safety standards."
Shares of Hasbro rose 32 cents to close at $27.61 a share on the New York Stock Exchange, while Mattel slipped 45 cents to $22.55 following the recall.
An interesting side-note on this story is that some companies / stores are already starting to look at European made products as a replacement for Far Eastern goods.
Naplenews suggests that as all European toys are stamped with the CE sticker, proving they have past stringent safety tests in Europe (which are far stricter than it's US counterparts), the shops / manufacturers feel safe that these goods would not have a similar problem.