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Is SeaWorld the Better Theme Park Stock Than Disney or Comcast?

By Rick Munarriz - Updated Feb 28, 2020 at 4:43PM

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All three of the major theme park operators posted growth in attendance and guest spending in the latest quarter, but the future doesn't look as encouraging.

SeaWorld Entertainment (SEAS -1.27%) became the third and final major theme park operator to post financial results for its holiday-season quarter. The operator of marine life theme parks joins Disney (DIS -3.29%), which offered up fresh financials earlier this month; and Universal Studios parent Comcast (CMCSA -0.40%), which reported in late January. 

SeaWorld stock was hitting six-year highs last week ahead of the company's latest financial update. It has gone on to surrender a quarter of its peak value, but it doesn't mean that Q4 was a disappointment. There were actually a few positive developments in the report. It's hard to gauge the market's reaction to a report in the middle of a brutal sell-off, especially if it's a tourist-facing business in these uncertain times for leisure and travel industries as coronavirus concerns intensify. 

Manta flying coaster skimming the water at SeaWorld Orlando.

Image source: SeaWorld Entertainment.

Sitting in the Splash Zone

SeaWorld Entertainment's fourth quarter hit most of the right notes. Revenue climbed 6.4% for the final three months of the year, double the 3.2% increase that Comcast's segment posted during the same period. Disney's theme park-helmed business came out on top with its 8.4% rise

The lead dog changes if we look at the bottom line. Disney's 9% increase in segment operating income is impressive, even if it was partly fueled by merchandise licensing gains. Comcast's adjusted EBITDA actually declined for the period, a sharp contrast to SeaWorld, which -- after backing out a legal settlement charge -- came through with a 30% surge on that front. 

All three companies posted increasing attendance and guest spending, a refreshing development for Disney and SeaWorld after they struggled with turnstile clicks earlier in the year. In SeaWorld's case, the 2.2% increase in attendance was able to push its guest count positive for the year, up 0.2% to 22.6 million visitors for all of 2019. SeaWorld was going to have a challenging 2019 pitted against the huge attendance gains in 2018. Disney was facing headwinds after another year of inflation-besting price hikes. 

We know now that the industry was in decent shape at the start of 2020, but it remains to be seen how things will play out going forward. Disney has already had to shutter some of its Asian parks, and it will take a $175 million charge in the current quarter for the closing of its Shanghai and Hong Kong resorts. Disney and Comcast have a presence in Asia, unlike SeaWorld, which is currently limited to its stateside collection of amusement and water parks.

"We have seen no discernible impact on our attendance related to coronavirus," new SeaWorld CEO Serge Rivera said during Wednesday morning's earnings call.

Containment and the eventual eradication of the coronavirus will naturally dictate how well SeaWorld, Disney, and Comcast fare in 2020. SeaWorld Entertainment has always stood out from its larger rivals in that it's a pure play on the theme park industry. In a buoyant economy with healthy tourism trends, it makes sense for SeaWorld to fare better as an investment than Comcast and Disney, which have meandering cable television properties, media networks, and movie studios in varying states of decline. However, with the travel industry unlikely to snap back to life right away even if we get welcome news on the coronavirus front, it does make SeaWorld riskier than its peers in the near term. SeaWorld stock may be the one to buy when the coast is clear, but for now, providing entertainment -- as Comcast and Disney do -- makes those two the smarter consumer discretionary stocks for your portfolio.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$105.06 (-3.29%) $-3.58
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$42.67 (-0.40%) $0.17
SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
SEAS
$56.83 (-1.27%) $0.73

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