How Will SeaWorld Earnings Perform?

SeaWorld Entertainment (NYSE: SEAS  ) will release its quarterly report on Tuesday. The report will mark the company's first report covering a full quarter as a public company, as it just had its IPO in April. Although shares have popped somewhat from their IPO price, investors will want to see SeaWorld earnings come out with equally impressive results.

SeaWorld is well-known for its namesake marine theme parks located strategically in states on all three of nation's major coasts. But SeaWorld also encompasses Busch Gardens theme parks, as well as water parks and other smaller offerings. Still, with many competing theme-park operators in the market, can SeaWorld make the most of its niche and top its rivals? Let's take an early look at what's been happening with SeaWorld Entertainment over the past quarter, and what we're likely to see in its quarterly report.

Stats on SeaWorld Entertainment

 

 

Analyst EPS Estimate

$0.51

Previous Quarter EPS

($0.49)

Revenue Estimate

$434.5 million

Change From Previous Quarter Revenue

82%

Source: Yahoo! Finance.

What's in store for SeaWorld earnings?
Analysts haven't had much time to adjust their views on SeaWorld earnings, but they've nevertheless found room to boost their June-quarter estimates by $0.02 per share over the past couple of months. The stock has done quite well, climbing more than 6% since early May.

SeaWorld's IPO came out to great fanfare, as private-equity owner Blackstone successfully priced the stock at the upper end of its range, and nevertheless saw a nice first-day pop from investors. In its first public earnings report in May, the company partially lived up to the hype, posting a 12% gain in revenue, coming largely from rises in ticket prices and in-park spending levels.

Unfortunately for SeaWorld, there's no shortage of competition among entertainment operators. Disney and  Universal Studios both managed to push through price increases at their attractions, as well, showing the general strength of the industry. Weak results from Six Flags (NYSE: SIX  ) last month, which featured a 3% drop in revenue, and a shortfall in earnings compared to expectations, weighed on SeaWorld's shares as well, although rival Cedar Fair (NYSE: FUN  ) fared somewhat better earlier this week when it reported better-than-expected earnings, as rising spending per customer offset a drop in attendance figures.

From an investing standpoint, SeaWorld's big danger is on its balance sheet. With $1.85 billion in outstanding debt resulting from the usual private-equity business model, the company needs to find ways to boost its profitability fairly rapidly. Although the favorable bond market allowed it to restructure most of its debt that bought it a few extra years on bond maturities, SeaWorld nevertheless will need weak traffic figures to reverse and grow sharply in order to generate much-needed cash flow.

In the SeaWorld earnings report, watch to see whether spring attendance figures do better than those of its peers. If it can drive customers into its parks better than its rivals can, SeaWorld stands a chance of delivering on the ambitious promises that its stock's premium valuation has made.

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