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• Janney has identified Cedar Fair as a top play on regional theme parks.
• The firm believes that Cedar Fair will hold up better during periods of economic weakness than its larger counterparts.
• Janney is impressed by Cedar Fair’s free-cash-flow and 5.5 percent dividend yield.
With summer travel season drawing to a close, Janney believes that now is the time to buy regional theme park stock Cedar Fair, LP (NYSE: FUN). In a new report, analyst Tyler Batory explains why Janney now has a Buy rating on Cedar Fair.
Favorable to destination parks
According to Batory, regional theme park operators like Cedar Fair typically benefit from much lower capex requirements than operators that run major destination theme parks. In addition, Batory argues that regional park operators are much more immune to economic cyclicality and their businesses hold up relatively well during economic downturns.
Growth drivers
Janney is projecting growth in ticket prices in 2016. In addition, the firm believes that Janney has growth upside when it comes to advanced purchase commitments and season pass sales. “These customers are important to the company because they typically spend more in the park than a window or single-day customer,” Batory explains.
Capex outlook
Batory points out that capex levels for Cedar Fair will likely remained elevated for a while due to recent acquisitions of Carowinds and Hotel Breakers. In addition, Janney expects that the company could choose to expand some of its undersized parks.
Outlook
Janney likes Cedar Fair’s 5.5 percent dividend yield and its free-cash-flow (FCF) generation. The firm is projecting $3.51 in earnings per share (EPS) from Cedar Fair in 2016, slightly ahead of the $3.44 consensus.
Janney has a $67 fair value estimate for Cedar Fair’s stock.
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Disclosure: the author holds no position in the stocks mentioned.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.