Analysts To SeaWorld: Show Us Sustainable Growth

On Friday, Barclays issued a retail industry note, highlighting SeaWorld Entertainment Inc SEAS after the company reported mixed fourth-quarter earnings, with revenue in line with expectations, but EBITDA below consensus estimates. Currently, analysts at Barclays rate SeaWorld as Underweight with a $18 price target.

Felicia Hendrix, an analyst at Barclays, wrote, "While we are encouraged by this management team's clear articulation of the company's challenges and their solutions, SEAS ultimately needs to generate sustainable top and bottom line growth for us to get more positive."

Takeaway Points

Analysts at Barclays gave two takeaways that they believe SeaWorld should address:

1. Profitability

Barclays noted that SeaWorld issued a year-over-year decline in EBITDA margins, which reflects an increase in selling, general and administrative expenses. Analysts wrote that these costs were implemented on initiatives to improve the company's reputation, which significantly impacted the company's ability to generate earnings.

2. Attendance Growth

While SeaWorld announced attendance growth in the fourth quarter, the first time since the first quarter of 2015, Barclays believes that this can be attributed to a calendar and weather benefit. Going forward, analysts want SeaWorld to increase attendance organically, through initiatives and better attractions that will drive traffic to the park and increase the company's top line.

At the time of this publication, SeaWorld was recently seen trading essentially flat on the day at $18.00.

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