Cedar Fair, LP

Cedar Fair, LP's (FUN - Snapshot Report) share price has been rallying since mid July, recently helped by the company's solid second-quarter results in which actual earnings came in far ahead of analyst estimates.

Company Description

Cedar Fair, LP owns and operates amusement and water parks in the United States. The company was founded in 1983, has a market cap of $1.22 billion and is headquartered in Sandusky, Ohio.

In spite of the financial turmoil that is plaguing our domestic economy, it seems that Americans still have the inclination to have some fun. Cedar Fair's second-quarter results, reported on Aug 5, are a testament to this notion.

Second-Quarter Results

Revenue was up 8% from last year to $296 million. Net income totaled $14.7 million, up from $$5.5 million last year. This produced earnings of 26 cents per share, far ahead of analyst estimates of 7 cents per share.

This was the fourth time in the last four quarters that the company has beaten analyst estimates, having done so by an average of 15 cents. It is also important to note though that two of these quarters still included negative earnings.

The company noted that in the first six months of 2008, it had attracted 7.6 million visitors compared to 6.7 million visitors in the same period last year.

Analyst Estimates

After the encouraging quarterly results, analysts boosted their earnings estimates. The current-year estimate is up to $1.32 per share from $1.24 30 days ago. The next-year estimate is projecting modest growth, now up to $1.37 per share from $1.30 per share 30 days ago.

Based upon the current year estimate this stock is trading with a forward P/E multiple of 16.6X, a slight premium to the overall market.

Statistics

Cedar Fair stacks up very favorably to its industry competition in a number of key statistical categories. Its ROE stands at 34% compared to the industry average of 10%. Its debt-to-equity multiple is 9X compared to the industry average of 34X.

The Chart

As previously mentioned, shares of FUN have been rallying since mid July as investors anticipated strong quarterly results from the company. This stock is trading far below its all-time high, but seems to have found a short-term bottom. More recently, share have begun to approach the $24 mark, a short-term high and level of resistance. Take a look at the chart below.