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Is Six Flags a Buy After Earnings?

Michael Lewis
October 25, 2013

Though very expensive, cyclical businesses to run, theme parks enjoyed a period of growth in the wake of the financial crisis as families looked to less-expensive vacations. The trend stuck, and a few of the publicly traded players have fared extraordinarily well. Even Comcast-owned Universal's theme parks, once a troubled spot for the conglomerate, are showing up on the company's financials as one of the brightest spots. A pure play on the business, Six Flags (NYSE: SIX), has seen similar fortunes -- along with its investors. Since mid-2010, the stock is up more than 300%. The company just issued earnings that missed analyst expectations, but it couldn't stop the market from rallying the stock yet again. Is Six Flags bound to keep tracking up?

Below estimates, but above water
With the stock up nearly 7% on the day of the release, Six Flags earnings were actually underneath analyst estimates for the three-month period, though with strong numbers in guest spending per capita and total traffic. Earnings on the whole were limited due to a tragic event at the Dallas location, where a woman fell out of a roller coaster to her death. Besides the legal expenses associated with the accident, the company saw guest counts decline at the location.

The terrible event aside, Six Flags still performed impressively and achieved record revenues of $505 million -- a 4% gain over the prior year's number. On a comparable sales basis, Six Flag's EBITDA grew by 4% in the quarter, and is up 8% so far this year. By 2015, the company is look