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| | Why Jakks Pacific?
Jakks Pacific design, manufacturs and markets toys. Their business model is based on licensing trademarks and brands that have a long product history.
It seems to be succesful as they have grown their revenues at about 10% compound annual rate for the last ten years.
The big risk of their business model is that they could lose licenses and that they have to bid with other toy companies for obtaining licenses. Their is no guarantee that they will be able to obtain new licenses in the future.
Their balance sheet is very strong. They have little debt.
They have more than 200 million cash.
The return on equity is 13% and the return on assets is 9%. These are not so strong, but if you adjust them for their available cash, they ROE will be more 20%.
Their net income / tot assets is about 0.1
and their adjusted net income/non current assets is about 1.
These are all indications that their business model creates a competitive advantage and they can increase revenue by developing new toys and entering new regions (Europe, Asia).
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