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SeaWorld , a leading aquatic-based theme park and entertainment company, is coming out of the pandemic downturn with a vengeance. SEAS is trading 458% off its pandemic lows, over 30% higher than its pre-pandemic levels, and it still has massive upside potential from here after bouncing off a critical technical support level last week.
SeaWorld proved its operational superiority in the amusement park space this past quarter, demonstrating record earnings that soared past estimates. Now analysts are getting more bullish on SEAS than I ever thought was possible, with the full-year 2021 EPS estimates tripling in just the past 2 months, driving this stock into a Zacks #1 (Strong Buy).
The Blackfish Stigma
SeaWorld went public in April of 2013, just three months before the release of the critically acclaimed documentary, Blackfish, which was a black eye for the theme park's main attraction. The killer whale (aka orca) exhibit and the fantastic aquatic acrobatics demonstrated by both the brilliant whales and their trainers had viewers in awe and is what brought people to the amusement park until this whistle-blowing documentary shed light on the inhumane practices.
Blackfish revealed the controversy surrounding an orca named Tilikum who was involved in the death of three people and the consequences involved in keeping these kings of the ocean in captivity. The documentary focused on the ignored intellect of orcas and how the unnaturally confined aquariums in which they existed caused them anxiety and claustrophobia, leading to the devasting death of three trainers.
Despite the enormous controversy surrounding this documentary and the level of truth behind it, it still led to a steep decline in attendance across parks due to the reach that Blackfish was able to attain. This stigma plagued the theme park financials and stock price for nearly 5 years and even drove its CEO to step down.
From the movie's release in 2013 to November of 2017, SEAS lost over 70% of its value, but the business and its management team have made operational pivots that have swung this stock from a falling knife to a moon-targeting rocket ship growth.
The Comeback
SeaWorld stopped breeding orca's in 2016 and has been focusing on investing heavily in other foot-traffic driving attractions across its 8 theme parks and 5 waterparks. Management has proven an aptitude for high return investments as the entertainment enterprise disassociates its brand from the Blackfish taboo. Its share price has reflected these attendance inspiring new verticals, driving up over 250% from its lows in November of 2017 to its pre-pandemic high, compared to the S&P 500's only 32% increase over the same period.
The COVID lockdowns threw a wrench in its operations like the rest of the amusement park space, but the speed at which SeaWorld has been able to bounce back is unparalleled. SEAS is soaring out of this pandemic with more momentum behind it than any competitors like Cedar Fair (FUN - Free Report) and Six Flags (SIX - Free Report) (who are trading at comparable valuation multiples), and there is so much more room for this stock to run. The economic recovery will be a tailwind for the company for the next few quarters as society resumes a growing level of normality.
Technical Break Down
Since February, SEAS has been consolidating around $50 a share, but after an exceptional Q2 earnings report released earlier this month (8/5), I think this stock is ready for its next leg higher. You can see from the chart below that SEAS bounced off a Fib-derived support level around $46.50 on Thursday of last week (8/19).
Image Source: TradingView
Final Thoughts
Recent fears of an economic slowdown from the Delta-dent have hindered SEAS upside in the past few weeks. Still, this market angst is beginning to subside, with this recent COVID resurgence appearing to have a negligible impact on our highly vaccinated economy.
SEAS saw some resistance at its 50-day moving average (which happened to line up with another resistance level) just south of $50 a share on Friday, but once these shares materially break above $50, I am looking at $60 as my next price target (over 20% upside from here).
After an outstanding showing of astonishingly swift recovery this past quarter, analysts have been shooting up their 12-18 months price targets as high as $79 a share (over 60% upside from where it closed on Friday). I wouldn't hesitate to buy these shares at their current fear-induced discount.
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Bull Of The Day: SeaWorld (SEAS)
SeaWorld , a leading aquatic-based theme park and entertainment company, is coming out of the pandemic downturn with a vengeance. SEAS is trading 458% off its pandemic lows, over 30% higher than its pre-pandemic levels, and it still has massive upside potential from here after bouncing off a critical technical support level last week.
SeaWorld proved its operational superiority in the amusement park space this past quarter, demonstrating record earnings that soared past estimates. Now analysts are getting more bullish on SEAS than I ever thought was possible, with the full-year 2021 EPS estimates tripling in just the past 2 months, driving this stock into a Zacks #1 (Strong Buy).
The Blackfish Stigma
SeaWorld went public in April of 2013, just three months before the release of the critically acclaimed documentary, Blackfish, which was a black eye for the theme park's main attraction. The killer whale (aka orca) exhibit and the fantastic aquatic acrobatics demonstrated by both the brilliant whales and their trainers had viewers in awe and is what brought people to the amusement park until this whistle-blowing documentary shed light on the inhumane practices.
Blackfish revealed the controversy surrounding an orca named Tilikum who was involved in the death of three people and the consequences involved in keeping these kings of the ocean in captivity. The documentary focused on the ignored intellect of orcas and how the unnaturally confined aquariums in which they existed caused them anxiety and claustrophobia, leading to the devasting death of three trainers.
Despite the enormous controversy surrounding this documentary and the level of truth behind it, it still led to a steep decline in attendance across parks due to the reach that Blackfish was able to attain. This stigma plagued the theme park financials and stock price for nearly 5 years and even drove its CEO to step down.
From the movie's release in 2013 to November of 2017, SEAS lost over 70% of its value, but the business and its management team have made operational pivots that have swung this stock from a falling knife to a moon-targeting rocket ship growth.
The Comeback
SeaWorld stopped breeding orca's in 2016 and has been focusing on investing heavily in other foot-traffic driving attractions across its 8 theme parks and 5 waterparks. Management has proven an aptitude for high return investments as the entertainment enterprise disassociates its brand from the Blackfish taboo. Its share price has reflected these attendance inspiring new verticals, driving up over 250% from its lows in November of 2017 to its pre-pandemic high, compared to the S&P 500's only 32% increase over the same period.
The COVID lockdowns threw a wrench in its operations like the rest of the amusement park space, but the speed at which SeaWorld has been able to bounce back is unparalleled. SEAS is soaring out of this pandemic with more momentum behind it than any competitors like Cedar Fair (FUN - Free Report) and Six Flags (SIX - Free Report) (who are trading at comparable valuation multiples), and there is so much more room for this stock to run. The economic recovery will be a tailwind for the company for the next few quarters as society resumes a growing level of normality.
Technical Break Down
Since February, SEAS has been consolidating around $50 a share, but after an exceptional Q2 earnings report released earlier this month (8/5), I think this stock is ready for its next leg higher. You can see from the chart below that SEAS bounced off a Fib-derived support level around $46.50 on Thursday of last week (8/19).
Image Source: TradingView
Final Thoughts
Recent fears of an economic slowdown from the Delta-dent have hindered SEAS upside in the past few weeks. Still, this market angst is beginning to subside, with this recent COVID resurgence appearing to have a negligible impact on our highly vaccinated economy.
SEAS saw some resistance at its 50-day moving average (which happened to line up with another resistance level) just south of $50 a share on Friday, but once these shares materially break above $50, I am looking at $60 as my next price target (over 20% upside from here).
After an outstanding showing of astonishingly swift recovery this past quarter, analysts have been shooting up their 12-18 months price targets as high as $79 a share (over 60% upside from where it closed on Friday). I wouldn't hesitate to buy these shares at their current fear-induced discount.