Purchase Six Flags, Secure Cedar Fair and SeaWorld instead?
The summer season is shaping up to be a crucial period for amusement park operators, as they navigate a mix of opportunities and challenges. Three major players in the industry - Six Flags, Cedar Fair, and SeaWorld Entertainment - are under the spotlight.
Six Flags, under the leadership of CEO Selim Bassoul, has adopted an unconventional approach, focusing on enhancing the guest experience with higher prices. This strategy seems to be paying off, as evidenced by a 36% surge in attendance and a 3% year-over-year rise in first-quarter revenue, reaching $142 million. However, delays in new attraction openings, such as the "Quantum Accelerator" at Six Flags New England, may temporarily impact near-term attendance growth.
Cedar Fair, renowned for its top-tier parks like Cedar Point, is receiving positive recognition for its parks' ongoing improvements and popular attractions. This bodes well for a strong attendance outlook in the summer season. The company's cautious approach to reopening in 2021 paid off, resulting in record annual earnings in 2022. Analyst Lizzie Dove, from Goldman Sachs, is optimistic about Cedar Fair's prospects, citing a strong park portfolio and a stable management team.
SeaWorld Entertainment's specific summer outlook is not extensively detailed, but the broader Orlando theme park market, including SeaWorld, is generally stable with steady visitor demand post-pandemic. The company's exposure to Central Florida offers pricing power, with little risk of losing local audiences. Analyst Dove is more upbeat about SeaWorld, setting a $75 price target that implies a whale-sized 34% gain from Tuesday's close.
Investment firm Dove has initiated coverage of these three amusement park operators, with a buy rating for Cedar Fair and SeaWorld Entertainment, and a sell rating for Six Flags. The firm's $50 price target on Cedar Fair implies an upside of 13%, on top of the company's dividend, which currently yields 2.7%.
However, it's not all smooth sailing for Six Flags. The company's losses in the first quarter have historically been more than offset when business spikes during the spring and summer. Yet, earnings per share slipped 14% in 2022, and attendance at Six Flags parks declined by 26%.
In conclusion, the summer outlook for Six Flags, Cedar Fair, and SeaWorld Entertainment is cautiously optimistic but mixed with some challenges. Delays in new attraction openings at some Six Flags parks may temper growth this summer, but foundational demand for amusement parks remains healthy. Cedar Fair benefits from established top-tier parks, while SeaWorld remains a solid player amid strong Orlando theme park tourism trends.
- Investment firm Dove, who has initiated coverage for Six Flags, Cedar Fair, and SeaWorld Entertainment, believes that the luxury lifestyle of visiting theme parks, paired with the anticipation of new attractions, could attract potential investors in the finance sector.
- Selim Bassoul, CEO of Six Flags, is focusing on increasing prices for a better guest experience, which may indicate a successful strategy for not only visitor satisfaction but also for potential investments in sports, considering the growing trend of sports and entertainment intertwining in various financial markets.
