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2-Star Stocks Poised to Plunge: Six Flags?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, theme park operator Six Flags Entertainment (NYSE: SIX  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Six Flags' business and see what CAPS investors are saying about the stock right now.

Six Flags facts

Headquarters (founded) Grand Prairie, Texas (1971)
Market Cap $2.6 billion
Industry Leisure facilities
Trailing-12-Month Revenue $1 billion
Management Chairman/CEO James Reid-Anderson
CFO John Duffey
Return on Capital (average, past 3 years) 3.3%
Cash/Debt $231.4 million / $957.2 million
Dividend Yield 5.2%
Competitors Cedar Fair
Universal Parks & Resorts
Walt Disney Parks and Resorts

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 26% of the 38 members who have rated Six Flags believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those bears, troym72, touched on the stock's seemingly unsustainable valuation:

Six Flags would have to increase their yearly EPS three-fold to justify the current trading price of $45 per share. Yes, I know that they just increased their dividend to [$0.60] per quarter giving a yield of 5%. ...

However, even with this dividend (which I question whether they can even afford to pay) ... the stock is still far overvalued in my opinion. Unless there is some major -- I mean major -- increase in profits on short order the price has to fall from here.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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Brian Pacampara
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I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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9/30/2014 4:04 PM
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Six Flags, Inc. CAPS Rating: **

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