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Bear of the Day: Six Flags (SIX)

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Six Flags Entertainment (SIX - Free Report) owns and operates regional theme parks, offering guests rides and water attractions, concerts, shows, restaurants, game venues, and retail outlets. The company also holds long-term licenses for certain Warner Bros. and DC Comic characters like Bugs Bunny and Batman.

Q2 Earnings Leave Investors Disappointed

Because of the coronavirus, Six Flags had to suspend operations of its North American parks on March 13, but today, many of its parks have now resumed partial operations.

These park closures hurt the company’s key metrics. Revenue was only $19 million for the quarter, and attendance of 433,000 plunged 96% year-over-year; net loss per share was $1.62 compared to earnings per share of $0.94 in the year-ago quarter.

Total guest spending per capita also took a hit, down 15% to $35.77, while its Active Pass Base declined 38% year-over-year. Not surprisingly, Six Flags sold much fewer season passes and memberships in Q2 than it did last year.

To help build and maintain sufficient liquidity, Six Flags is continuing to reduce operating expenses and either defer or eliminate certain capital initiatives planned for this year and next.

Bottom Line

SIX is now a Zacks Rank #5 (Strong Sell).

Seven analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen well over two dollars to a loss of $4.02 per share; earnings are expected to see a triple-digit decline for fiscal 2020.

Shares have fallen over 60% since the beginning of the year compared to the S&P 500’s +2.3% return.

Six Flags will likely have a long, hard road ahead of it. Even though it’s gone to great lengths to increase the safety of its guests, like new cleaning regimens and implementing social distancing measures, it will be difficult to get its business back to pre-pandemic growth levels.

Until there’s a coronavirus vaccine on the market and the broad economic picture comes into focus, companies like Six Flags will have a hard time getting customers back, as well as getting customers to spend money at their parks like they used to.

Investors who are interested in adding travel-leisure stock to their portfolio could consider Camping World Holdings (CWH - Free Report) , a company that sells new and used RVs. CWH is a #2 (Buy) on the Zacks Rank, and shares have skyrocketed 165% year-to-date.
 

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