These Analysts Think Six Flags Stock Is Still Worth The Ride

Amusement and theme park company Six Flags Entertainment Corp SIX reported disappointing third-quarter earnings, notable for a sales miss and weaker guest spending per capita.

The Analysts

KeyBanc Capital Markets analyst Brett Andress maintains an Overweight rating on Six Flags with a $62 price target.

Wedbush analyst James Hardiman maintains at Outperform, $62 price target.

KeyBanc: 'Well Below' Low Bar

Six Flags' earnings report fell "well below" an already low bar, including a $22.7 million miss on the revenue line and per capita spend of $42.44 versus expectations of $43.93, Andress wrote in a note.

Management attributed its miss to four factors, including attendance gains seen at a newly acquired park tend to have a lower per capita spend, higher pass attendance mix and strategic promotions to drive pass sales. Rhe strategic promotions to drive pass sales is "more worrisome," but further details from management may add clarity.

Six Flags also lapped an approximate 500,000 weather-related attendance headwind last year, which Andress said implies this year's 3.2% attendance growth is disappointing. In fact, accounting for an estimated 80 to 90 basis point lift from Magic Waters, core attendance growth was likely just over 2%.

EBITDA margins and flow-through were positive and EBITDA margins beat by 10 basis points as the company benefited from better-than-expected cost controls.

Wedbush: Surprise Per Capita Drop

The earnings report shows admissions revenue per capita was down 2.7%, which fell short of the Street's estimate of positive 1.9% and Wedbush's more optimistic estimate of 2.5% growth. In-park revenue per capita was up just 60 basis points, shy of the Street's 0.8% growth estimate and Wedbush's 2.0% growth estimate.

The per capita miss came as a surprise given the June 2018 acquisition of Premier Parks. Six Flags was negatively impacted from the Active Pass Base which come with notably lower admissions compared to existing parks.

Price Action

Shares of Six Flags traded lower by 12% Wednesday and hit a new 52-week low of $44.84.