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Category: Stock Market and Six Flags
Date: 23 October 2019 Stock Price: $51.23 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Six Flags, the world's largest regional theme park company that runs and operates 26 parks across the United States, Mexico and Canada.
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About Six Flags
Six Flags Entertainment Corporation is the world’s largest regional theme park company with $1.5 billion in revenue and 26 parks across the United States, Mexico and Canada. For more than 58 years, Six Flags has entertained millions of families with world-class coasters, themed rides, thrilling water parks and unique attractions.
Overview of Six Flags 3rd quarter 2019 earnings report
Data below refers to quarterly data unless specified otherwise:
- Total revenues: $621.180 million (up from $618.820 million for the same period of the previous year)
- Total revenues increased by 0.38% over the last 12 months
- Operating expenses: $189.820 million (up from $188.704 million for the same period of the previous year)
- Operating expenses increased by 0.59% over the last 12 months
- Net income: $179.833 million (down from $184.417 million for the same period of the previous year)
- Diluted earnings per share: $2.11 (down from $2.16 for the same period of the previous year)
- PE ratio of Six Flags: 17
- Diluted weighted-average shares outstanding: 85.045 million (down from 85.516 million for the same period of the previous year)
- Cash and cash equivalents: $211.797 million
- Cash and cash equivalents per share: $2.49
- Cash and cash equivalents makes up 4.88% of Six Flags' market capital
- Cash and cash equivalents makes up 7.01% of Six Flags' total assets
- Cash generated from operations: $214.688 million
- Cash generated from operations per share: $2.52
- Cash generated from operations per share: $2.52
Six Flags' management commentary on their 3rd quarter results
GRAND PRAIRIE, Texas--(BUSINESS WIRE)-- Six Flags Entertainment Corporation (NYSE: SIX), the world’s largest regional theme park company and the largest operator of waterparks in North America, today announced revenue was $621 million for the third quarter of 2019, a $1 million increase over the same period in 2018. The increase in revenue was attributable to attendance growth of 3 percent, or 440,000, to 14.0 million guests in the third quarter of 2019, which was partially offset by a 1 percent decrease in guest spending per capita and an expected 26 percent decrease in sponsorship, international agreements and accommodations revenue.
“We were pleased to achieve record attendance and revenue for the first nine months of 2019, with solid growth across both our legacy and newly acquired parks,” said Jim Reid-Anderson, Chairman, President and CEO. “As a team, we are laser focused on achieving our tenth consecutive record year by driving our strategic growth areas, including growing penetration of our membership programs to benefit from the enhanced loyalty and lifetime value of members.”
Total guest spending per capita for the third quarter of 2019 was $42.44, a reduction of $0.58 compared to the third quarter of 2018. Admissions per capita decreased 3 percent to $25.17 and in-park spending per capita increased $0.11 to $17.27 compared to the same period in 2018. Several factors contributed to the reduction in admissions per capita. First, there was a higher proportion of attendance from the company’s Active Pass Base, representing the total number of guests who are enrolled in the company’s membership program or who have a season pass, which puts downward pressure on admissions per capita spending. Second, the company engaged in strategically targeted promotions to drive membership penetration. Third, there were attendance gains at the company’s new parks, which have significantly lower admissions per capita than the existing parks. Finally, a portion of new membership revenue is deferred into the following year due to the 12-month commitment period spanning the calendar year-end. These impacts were partially offset by ticket price increases and sales of higher-priced membership tiers.
Attendance at the company’s parks for the first nine months of 2019 grew to 26.7 million guests, an increase of 989,000 guests compared to the first nine months of 2018. The increase in attendance was primarily driven by the higher Active Pass Base, growth in the parks the company began operating on June 1, 2018, and the new park in Rockford, Illinois. Guest spending per capita decreased less than 1 percent to $42.86 for the first nine months of 2019, compared to the prior year period, with admissions per capita decreasing 2 percent to $25.15 and in-park spending per capita increasing 1 percent to $17.71.
The Active Pass Base increased 2 percent year-over-year as a result of the company’s continued success in upselling guests from single day tickets to memberships and season passes. The mix of memberships in the Active Pass Base increased significantly as a result of the company’s efforts to increase penetration. Members are the company’s most loyal and valuable guests, with higher revenue, retention rates and lifetime value compared to traditional season passes. Deferred revenue of $198 million, a record high for the third quarter, increased by $5 million, or 2 percent, compared to September 30, 2018.
“We were pleased to achieve record attendance and revenue for the first nine months of 2019, with solid growth across both our legacy and newly acquired parks,” said Jim Reid-Anderson, Chairman, President and CEO. “As a team, we are laser focused on achieving our tenth consecutive record year by driving our strategic growth areas, including growing penetration of our membership programs to benefit from the enhanced loyalty and lifetime value of members.”
Total guest spending per capita for the third quarter of 2019 was $42.44, a reduction of $0.58 compared to the third quarter of 2018. Admissions per capita decreased 3 percent to $25.17 and in-park spending per capita increased $0.11 to $17.27 compared to the same period in 2018. Several factors contributed to the reduction in admissions per capita. First, there was a higher proportion of attendance from the company’s Active Pass Base, representing the total number of guests who are enrolled in the company’s membership program or who have a season pass, which puts downward pressure on admissions per capita spending. Second, the company engaged in strategically targeted promotions to drive membership penetration. Third, there were attendance gains at the company’s new parks, which have significantly lower admissions per capita than the existing parks. Finally, a portion of new membership revenue is deferred into the following year due to the 12-month commitment period spanning the calendar year-end. These impacts were partially offset by ticket price increases and sales of higher-priced membership tiers.
Attendance at the company’s parks for the first nine months of 2019 grew to 26.7 million guests, an increase of 989,000 guests compared to the first nine months of 2018. The increase in attendance was primarily driven by the higher Active Pass Base, growth in the parks the company began operating on June 1, 2018, and the new park in Rockford, Illinois. Guest spending per capita decreased less than 1 percent to $42.86 for the first nine months of 2019, compared to the prior year period, with admissions per capita decreasing 2 percent to $25.15 and in-park spending per capita increasing 1 percent to $17.71.
The Active Pass Base increased 2 percent year-over-year as a result of the company’s continued success in upselling guests from single day tickets to memberships and season passes. The mix of memberships in the Active Pass Base increased significantly as a result of the company’s efforts to increase penetration. Members are the company’s most loyal and valuable guests, with higher revenue, retention rates and lifetime value compared to traditional season passes. Deferred revenue of $198 million, a record high for the third quarter, increased by $5 million, or 2 percent, compared to September 30, 2018.
Six Flags (NYSE: SIX) stock price history
The image below, obtained from Google, shows the stock price history of Six Flags over the last 5 years. And it's been a good time for Six Flags stockholders. 5 years ago the stock was trading at around $39.40 a stock and its currently trading at $51.23 a stock. That's a return of 30% provided to Six Flags stockholders over the last 5 years.
The stock of Six Flags is trading at a lot closer to its 52 week low of $46.68 than it is to its 52 week high of $67.37 which to us is an indication that the momentum and sentiment of Six Flags stock is negative at this point in time. And based on pre-market trade the stock of Six Flags is in for a tough time as its down -5.7% in pre-market trade.
The stock of Six Flags is trading at a lot closer to its 52 week low of $46.68 than it is to its 52 week high of $67.37 which to us is an indication that the momentum and sentiment of Six Flags stock is negative at this point in time. And based on pre-market trade the stock of Six Flags is in for a tough time as its down -5.7% in pre-market trade.
Recent coverage of Six Flags
The extract below discusses Six Flag's reduced borrowing costs as obtained from TheStreet.com
Six Flags Entertainment Corporation (NYSE: SIX), the world's largest regional theme park company and the largest operator of waterparks in North America, today announced that its bank lenders have approved a reduction to the borrowing rate on the Company's $798 million Term Loan B Credit Facility. The overall borrowing rate was reduced by one-quarter of one percent, moving from a rate of LIBOR plus 2.00 percent to a rate of LIBOR plus 1.75 percent. Excluding the costs of the transaction, the lower borrowing rate will save the Company approximately $2.0 million annually in interest costs.
Six Flags Entertainment Corporation (NYSE: SIX), the world's largest regional theme park company and the largest operator of waterparks in North America, today announced that its bank lenders have approved a reduction to the borrowing rate on the Company's $798 million Term Loan B Credit Facility. The overall borrowing rate was reduced by one-quarter of one percent, moving from a rate of LIBOR plus 2.00 percent to a rate of LIBOR plus 1.75 percent. Excluding the costs of the transaction, the lower borrowing rate will save the Company approximately $2.0 million annually in interest costs.
Six Flags (NYSE: SIX) latest stock valuation
So what is Six Flags stock worth based on the release of their latest earnings report? Based on Six Flags latest earnings report our valuation models provide a target (full value) price for Six Flags stock at $58.30 a stock (slightly lower than our target price we had for Six Flags for their 2nd quarter 2019 earnings valuation). We therefore believe that the stock of Six Flags is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $58.30 Therefore we believe a good entry point into Six Flags stock is at $52.50or below. And since Six Flags is trading at below our suggested entry point into the stock we rate Six Flags as a buy.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $58.30 Therefore we believe a good entry point into Six Flags stock is at $52.50or below. And since Six Flags is trading at below our suggested entry point into the stock we rate Six Flags as a buy.
Next earnings release date for Six Flags
It is expected that Six Flags (NYSE: SIX) 4th quarter 2019 earnings report will be released in late Janaury 2020