It seems as if SeaWorld Entertainment (SEAS 1.15%) investors keep sitting in the first three rows of the theme park operator's killer whale shows, because every time the company wants to make a big splash, shareholders walk away all wet.

SeaWorld stock fell again last week, tumbling 10.7% after posting another quarter of unimpressive financial results. Wall Street pros would go on to slash profit targets, and even Moody's got in on the action by downgrading the operator's credit rating. We may be just two years into new management's three-year turnaround plan, but it sure doesn't seem as if things will be getting better anytime soon.

Manta roller coaster at SeaWorld Orlando seemingly skimming the water.

Image source: SeaWorld Entertainment.

Into the belly of the whale

SeaWorld's revenue climbed less than 1% to $373.8 million, as the favorable benefit of the timing of the Easter holiday was offset by a decline in the number of guests paying top dollar to visit one of its gated attractions. Overall attendance did inch higher -- up 138,000 guests -- but that was mostly locals on annual passes, and naturally they tend to spend less inside the park. SeaWorld experienced a decline in international visitors as well as U.S. domestic guests outside a 300 mile radius from the parks. Attendance for the first half of 2017 remains negative given the brutal first quarter, with 353,000 fewer visitors than it entertained during the first six months of last year.

SeaWorld also posted a big loss, but that was sandbagged by a one-time asset impairment charge related to SeaWorld Orlando. Adjusted EBITDA actually rose 24% during the quarter, but SeaWorld did lower its forecast on that front for all of 2017. The midpoint of its adjusted EBITDA guidance is now $295 million, well below its prior target of $345 million. The new outlook won't be enough to trip up its debt covenants, but it could give the leveraged company trouble if those goal posts continue to slide.

Analysts are scaling back their expectations, but that doesn't mean they're all bearish. Steven Wieczynski at Stifel concedes that the quarter was disappointing, but feels that SeaWorld's strategic initiatives appear to be working. Michael Swartz at SunTrust feels the turnaround will take a bit longer than he was hoping, but he was still encouraged by the uptick in season pass sales outside of California and SeaWorld's cost-saving efforts. Both analysts slashed their price targets from the low $20s to $16, which at current levels offers reasonable upside.

These are big waves that SeaWorld has to navigate through. Its worst-hit park remains its original SeaWorld San Diego, which is the only one suffering a decline in local visitors since it shifted away from its controversial orca performances. SeaWorld risks alienating its fans of marine life shows without doing enough to sway animal-right activists, a lose-lose scenario that seemed like the right approach when CEO Joel Manby came on two years ago. Investors will want to make sure that SeaWorld can live up to its now reduced adjusted EBITDA forecast, because as bad as things seem now the waves can get even choppier if creditors start to get nervous.