On Friday, toy maker Mattel (MAT) reported a second quarter profit of $11.8 million or $0.03 per share, a sharp decline from the $22.8 million or $0.06 a share it turned in for the comparable period last year.

However, both earnings per share and second-quarter revenue improved upon analysts’ estimates, which put profits at $0.04 per share and revenue at $1.04 billion.

The company attributed the uptick in profits to strong sales of the American Girl Brand, as well as sales of promotional toys associated with High School Musical, Speed Racer, Kung Fu Panda and Batman: The Dark Knight.

At the same time, sales of Mattel’s flagship brand, Barbie, declined 6%; this could be offset, however, if Mattel wins the rights to competitor MGA’s billion-dollar Bratz doll business. The company has already won a ruling that could entitle it to as much as $350 million in damages for property infringement.

In the period ending June 30th, Mattel posted a gross margin of 44.5%, a 30-basis point improvement over the margin posted in the comparable period last year. I consider this a promising sign of the firm’s flexibility - one that I hope is sustainable.

Total second-quarter sales were $1.11 billion, as compared to $1 billion in 2007’s second quarter. This was particularly good news, given the fact that the firm’s net sales fell 2% in the first quarter.

Based on these results, however, I don’t expect analysts to dramatically increase their full-year estimates; Mattel would have to put forth a few more solid quarters before the masses start flocking to the stock. Following this quarter, “cautiously optimistic.” Should be the watchwords.

And investors may be asking themselves: Why not buy Hasbro (HAS)? After all, its stock has been on a roll, it hasn’t been battered by lead-toy recalls (as Mattel has), and it’s turned in a string of solid results.

Mattel closed at $20.66, up $2.38 or 13.02%.