There's love in the air when it comes to the country's national theme park and regional amusement park operators heading into Valentine's Day -- and we're not just talking about SeaWorld Entertainment (SEAS), with its reportedly making a $3.4 billion proposal on bended knee to wed regional amusement park operator Cedar Fair (FUN -1.14%).
There's been a wave of good news so far during earnings season, and we still have three more industry reports to go before the end of February. Turnstiles are clicking for year-round operators despite higher prices and the pandemic's persistence, and with great pricing power comes great profitability. Let's go over the recent wave of good news, and the catalysts that can keep the good times rolling.
Image source: Getty Images.
Looking back
Disney (DIS 0.18%) and Universal parent Comcast (CMCSA -0.37%) were the first two theme park operators to serve up fresh financials for the final three months of the 2021 calendar year. Both media giants held up well with their gated attractions.
Comcast kicked things off two weeks ago by announcing that its theme parks segment just reported its most profitable fourth quarter, and if we narrow the focus to its expanding Universal Orlando resort in Florida it delivered the best performance under Comcast's ownership for any quarter. Disney followed on Wednesday, coming through with its declared to be record revenue and operating income at its domestic parks and resorts.
SeaWorld Entertainment making an unsolicited buyout offer on Cedar Fair -- and Cedar Fair did reveal that it had received a proposal to be acquired -- should also light a fire under the industry. This is fragmented market, and it wouldn't be a surprise if Six Flags Entertainment (SIX -0.50%) and smaller players decide to team up to take advantage of renewed consumer interest in amusement parks coming out of the pandemic.
Looking ahead
Cedar Fair reports financial results on Wednesday. SeaWorld and Six Flags follow with their quarterly updates a week later. SeaWorld should follow along the lines of the blowouts reported by Disney and Comcast. They have an emphasis on year-round parks in Southern California and Central Florida. Six Flags and Cedar Fair have more seasonality in their numbers, as many of their destinations are closed outside of Halloween and holiday events. They probably have strong annual pass numbers to report relative to where they were a year earlier, heading into what should be a strong peak spring and summer run this year.
The catalysts are there. Comcast's Universal Orlando announced on Friday afternoon that guests will no longer be required to wear masks while indoors starting on Saturday. In terms of financial ramifications, that will probably result in an uptick in guest counts, with per-capita spending climbing higher as more guests buy food and beverages to consume as they snake through the richly themed indoor queues.
Another catalyst will come on Valentine's Day, even if this one might be a heartbreaker for park enthusiasts. SeaWorld parks in Central Florida will be increasing pass prices on Monday, at least according to the websites of SeaWorld Orlando and Busch Gardens Tampa. With SeaWorld parks set to open thrill rides across most of its parks in the coming weeks -- starting with the Ice Breaker roller coaster at SeaWorld Orlando next weekend -- it shouldn't have a problem propping up higher guest counts despite the timely hike in admissions.
This is a good time for most leisure stocks, but park operators are sitting pretty right now. There's two years of pent-up demand, and the regional nature of these establishments of escapism makes them easy getaways for folks that don't want to go too far away until the pandemic is truly vanquished. It's been a big couple of weeks for the five publicly traded players in this niche, but the thrills could just be getting started in 2022.
