Please ensure Javascript is enabled for purposes of website accessibility

Six Flags Stock Has a Lot to Prove on Wednesday

By Rick Munarriz - Oct 24, 2017 at 10:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's time to check out the most seasonally potent quarter for the regional amusement park operators.

It will be time to strap in and see where the coaster ride takes you when Six Flags (SIX -4.76%) reports financial results on Wednesday morning. The regional amusement park operator steps up with its third-quarter results, and there's a lot riding on the performance. Most of Six Flags' gated attractions are open seasonally, and summer -- when school is out and thrill-seeking youth need something to do -- is its most potent time of the year. 

Analysts are holding out for revenue of $583.3 million, up 4.6% since the prior year's summer-containing quarter. Wall Street's forecasting per-share profit of $1.81, well above the $1.09 it generated a year earlier. The third quarter is so important for Six Flags that it's expected to account for 43% of its revenue and nearly all of its earnings for 2017. 

Twisted Colossus at Six Flags Magic Mountain in California.

Image source: Six Flags.

You must be this tall to ride

Six Flags will be the first park operator to report this earnings season, giving investors the first glimpse of how the industry held up in light of leisure trends and the storms that ravaged Florida and Texas near the end of the summer season. Six Flags doesn't have any parks in Florida and the three locations it runs in Texas were largely spared from Hurricane Harvey's force, but windstorm uncertainty likely ate into overall demand.

We won't have just Six Flags reporting for long. Universal Studios parent Comcast (CMCSA -0.26%) reports on Thursday, and while it relies on its namesake cable business and NBCUniversal to generate the bulk of its business, its theme parks have been growing briskly since the arrival of The Wizarding World of Harry Potter on both coasts. 

Cedar Fair (FUN -0.74%) is the closest match to a publicly traded Six Flags rival, as both operate regional amusement parks are mostly open seasonally. It reports next week. Disney (DIS -0.14%) and SeaWorld Entertainment (SEAS -2.51%) will wrap up the earnings reports the week after that. 

It's an airtime machine

The amusement park industry would seem to be a hot niche these days. Marketers should be drooling at the chance to reach thrill-seeking millennials at a time when the country's youth are sidestepping traditional advertising mediums. In-park tech keeps evolving, giving the leading attraction operators new ways to engage with their guests. Unfortunately, the stock market isn't feeling as bullish.

All five of the publicly traded companies are trailing the market in 2017. Disney and SeaWorld are trading lower this year, while Comcast, Cedar Fair, and Six Flags have been limited to single-digit percentage gains. SeaWorld Entertainment has had its unique brand-tarnishing challenges, and Disney is being held back by weakness at ESPN and its other media network properties. Cedar Fair and Six Flags have posted meager gains despite offering chunky yields. Comcast is actually the biggest gainer this year, though its 7% gain isn't much to crow about. 

Six Flags will set the tone for the upcoming reports. It's been mortal in previous outings, missing Wall Street's profit targets in three of the past four quarters. However, that's all in the past. It's time to check out the consumer-facing operator's seasonally strongest quarter, and if the industry is going to bounce back into favor, it's going to have to come ready to ride on Wednesday morning.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Six Flags Entertainment Corporation Stock Quote
Six Flags Entertainment Corporation
SIX
$22.39 (-4.76%) $-1.12
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$95.79 (-0.14%) $0.13
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$39.03 (-0.26%) $0.10
Cedar Fair, L.P. Stock Quote
Cedar Fair, L.P.
FUN
$43.19 (-0.74%) $0.32
SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
SEAS
$44.83 (-2.51%) $-1.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
319%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.