Why the Bottom Fell Out of Six Flags Shares

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

 Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of thrill-ride provider Six Flags (NYSE: SIX  ) were leaving investors feeling queasy today, falling as much as 15% after a subpar earnings report.

So what: Revenues of $485 million in the all-important third quarter fell well short of expectations of $514 million, growing just 2% from the year ago. As the amusement-park business is highly seasonal and dependent on the warm summer months, that miss was especially painful. Six Flags does about half of its sales in the third quarter. Cash earnings per share were up slightly for the quarter from $4.12 to $4.33, while GAAP EPS were distorted to its divestment from Dick Clark Productions. The theme-park chain also increased its quarterly dividend 50% to $0.90 per share, giving it a 6.3% dividend yield after today's pullback.

Now what: Shares have doubled over the past year, but after the dividend increase, they look like they could be a good buy. Based on the company's cash earnings over the past year, its P/E is about 14. Sluggish growth is a concern, but a number of rides set for 2013 indicate plenty of optimism about the future. More than $1 billion in tax loss carry forwards also gives the company an advantage in the near future.

Don't get taken for a ride by Six Flags. Add the company to your Watchlist for all the latest news.

Jeremy Bowman and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2074316, ~/Articles/ArticleHandler.aspx, 10/22/2016 3:47:55 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 18 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
SIX $51.82 Up +0.27 +0.52%
Six Flags CAPS Rating: **