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Bull of the Day: Six Flags Entertainment (SIX)

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Six Flags Entertainment Corp (SIX - Free Report) , a Zacks Rank #1 (Strong Buy) owns and operates regional parks. The Company has parks comprised of theme, water and zoological parks offering rides, water attractions, themed areas, concerts, shows, restaurants, game venues and retail outlets. The Company holds long-term licenses for theme park usage throughout the United States, Canada, Mexico and other countries of certain Warner Bros. and DC Comics characters.

Recent Earnings Data

In its most recent earnings report, SIX beat both the Zacks consensus earnings and revenue estimate for the second consecutive quarter.  On a year over year basis, revenues improved by +30%, and are on track to post a record performance in 2018. Moreover, the quarterly report showed that SIX posted a record-high Active Pass Base while increasing prices for both food, and ticket prices.   Further, the revenue growth was also aided by a +27% increase in the total number of guests visiting the parks. 

Looking Forward

SIX recently announced that they acquired the lease rights for 5 new parks; Houston, Phoenix, 2 in Oklahoma, and Buffalo.  These five parks generated 2 million attendees last year, which will be added to the 30.4 million annual visitors who attended SIX’s parks. 

Further, management announced its international expansion plans as they will be adding 3 new parks in Nanjing China (expected to begin opening in 2021).  This will add to its international portfolio of parks in the UAE, Saudi Arabia (announced in April of 2018), and Zhejiang China. 

SIX beat both top and bottom line expectations in Q1, and is currently expected to see earnings to grow by +33.8% and revenues increase by +7.76% for fiscal year 2018. 

Management’s Take

According to Jim Reid-Anderson, Chairman, President and CEO, “We are firing on all cylinders as we made excellent progress in the quarter against each of our five growth initiatives. With our record-high Active Pass Base, ongoing price increases across all ticket and culinary programs, growing dining pass penetration, new water park openings and new international licensing agreements, we are poised to deliver another record year of financial performance in 2018. We remain laser-focused on exceeding $600 million of Modified EBITDA1 in 2018 and continue to work toward our long-term aspirational goal of $750 million of Modified EBITDA by 2020.”

Price and Earnings Consensus Graph

As you can see in the graph below, the stock price has been trending upwards for the past several years.

Six Flags Entertainment Corporation New Price and Consensus

Six Flags Entertainment Corporation New Price and Consensus | Six Flags Entertainment Corporation New Quote

Increasing Earnings estimates

Since the announcement of their international expansion, the earnings estimates have been positively revised for the next two quarters, and FY 18 & FY 19; Q2 18 improved from $0.91 to $0.93, Q3 rose from $2.30 to $2.35, FY 18 was lifted from $2.73 to $2.84, and FY 19 increased from $3.00 to $3.14.

Bottom Line

The international announcement was a big boost for the company as many investors were awaiting specific news on SIX’s expansion plans.  These new parks are expected to be the long term growth drivers for the company beyond 2021.

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