Six Flags Entertainment (NYSE:FUN) Announces Earnings Results

Key Points

• Third-quarter EPS missed sharply: Six Flags reported a loss of $3.59 per share versus analysts’ expected $1.93 profit. Revenue of $1.17 billion slightly beat estimates but declined 11% year over year.
• October weakness weighed on the outlook: Attendance fell 9% year over year amid unfavorable weather and ride closures following a fatal incident at Six Flags Over Georgia. Management expects fourth-quarter Adjusted EBITDA of $140 million-$150 million, down from $166.9 million a year earlier, though it still expects full-year same-park Adjusted EBITDA growth.
• Cash generation and debt reduction improved: First-nine-month free cash flow reached $257 million, up about $300 million year over year, and the company reduced debt by $275 million. The active pass base was up 7% at September’s end.

Six Flags Entertainment (NYSE:FUN - Get Free Report) posted its earnings results on Thursday. The company reported ($3.59) earnings per share (EPS) for the quarter, missing the consensus estimate of $1.93 by ($5.52), FiscalAI reports. The firm had revenue of $1.17 billion during the quarter, compared to analyst estimates of $1.16 billion. Six Flags Entertainment had a negative net margin of 57.25% and a positive return on equity of 7.43%. The business's revenue for the quarter was down 11.0% on a year-over-year basis. During the same quarter in the prior year, the firm earned ($2.20) earnings per share.

Here are the key takeaways from Six Flags Entertainment's conference call:

• Third-quarter same-park revenue rose 1.4% to $1.17 billion and Adjusted EBITDA increased 1.1% to $493 million, with the company holding a 42% margin despite weather challenges. Attendance was essentially flat, while per-capita spending increased 1.3% and fewer complimentary tickets improved attendance quality.
• For the first nine months, same-park Adjusted EBITDA grew about 11% to $639.5 million and margins expanded roughly 200 basis points. Reported free cash flow was $257 million, up about $300 million year over year, alongside $275 million of debt reduction and $1.06 billion in quarter-end liquidity.
• October attendance fell 9% year over year amid unfavorable weather and the Georgia incident and related ride closures; management expects fourth-quarter Adjusted EBITDA of $140 million-$150 million, down from $166.9 million a year earlier. The company still expects full-year same-park Adjusted EBITDA to grow, but described the October shortfall as a headwind.
• A guest died at Six Flags Over Georgia, prompting an investigation and a company-wide ride safety review supported by independent specialists. The company said some ride closures affected October visitation, while it could not yet comment further on the incident pending the investigation.
• Management cited a 7% year-over-year increase in the active pass base at September’s end and cross-park visits running about five times last year’s level. It is also reviewing parks and real estate for potential sales to reduce debt, while targeting mid-30% Adjusted EBITDA margins and net leverage of about four times over time.

Six Flags Entertainment Stock Performance

Shares of FUN stock traded up $0.79 during trading hours on Friday, hitting $10.03. The stock had a trading volume of 11,218,551 shares, compared to its average volume of 5,953,021. The firm has a market capitalization of $1.03 billion, a PE ratio of -1.10 and a beta of 0.50. Six Flags Entertainment has a twelve month low of $6.60 and a twelve month high of $26.28. The stock's 50 day moving average is $11.05 and its 200 day moving average is $16.73. The company has a debt-to-equity ratio of 43.34, a current ratio of 0.42 and a quick ratio of 0.36.

More Six Flags Entertainment News

Here are the key news stories impacting Six Flags Entertainment this week:

• Positive Sentiment: Longer-term indicators improved: the active pass base grew 7% year over year, and free cash flow for the first nine months improved by $300 million. Six Flags: 3 Key Takeaways for Long-Term Investors
• Neutral Sentiment: Barclays lowered its price target from $22 to $13 but maintained an “overweight” rating; the new target implies 29.6% upside from the cited $10.03 price, though the sizable reduction reflects a more cautious valuation. Barclays stock recommendations
• Negative Sentiment: Third-quarter EPS was a loss of $3.59, far below analysts’ expected $1.93 profit. Revenue of $1.17 billion slightly topped estimates but fell 11% year over year. The company also cut its profit outlook after October setbacks, including attendance pressure following a fatal Georgia coaster incident, and announced a ride-safety review. Six Flags narrows losses, but October's double blow forces profit outlook cut
• Negative Sentiment: Two law firms announced investigations into potential securities claims related to Six Flags, adding legal and reputational uncertainty for investors. Six Flags investors notified of securities fraud investigation

Wall Street Analysts Forecast Growth

A number of research firms have recently commented on FUN. Wall Street Zen cut Six Flags Entertainment from a "hold" rating to a "sell" rating in a research report on Sunday, July 12th. Mizuho set a $5.00 price objective on Six Flags Entertainment in a research note on Wednesday, October 21st. Guggenheim reduced their price target on shares of Six Flags Entertainment from $28.00 to $17.00 and set a "buy" rating on the stock in a research report on Wednesday, October 21st. Stifel Nicolaus set a $15.00 price target on shares of Six Flags Entertainment in a research note on Thursday. Finally, Zacks Research upgraded Six Flags Entertainment from a "strong sell" rating to a "hold" rating in a report on Monday, October 12th. Seven equities research analysts have rated the stock with a Buy rating, seven have given a Hold rating and two have given a Sell rating to the company's stock. According to MarketBeat, Six Flags Entertainment presently has an average rating of "Hold" and a consensus price target of $15.85.

Insider Buying and Selling

In related news, CEO John Reilly purchased 15,713 shares of the business's stock in a transaction dated Wednesday, August 12th. The stock was acquired at an average price of $15.80 per share, for a total transaction of $248,265.40. Following the completion of the purchase, the chief executive officer directly owned 297,736 shares of the company's stock, valued at $4,704,228.80. This trade represents a 5.57% increase in their ownership of the stock. The purchase was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Corporate insiders own 2.10% of the company's stock.

About Six Flags Entertainment

Six Flags Entertainment Corporation is a regional theme park operator headquartered in Charlotte, North Carolina. The company owns and operates amusement parks, water parks and resort properties, offering roller coasters, family rides, live entertainment, seasonal events, food and beverage, merchandise, and other guest experiences. Its portfolio includes parks operating under the Six Flags, Cedar Fair and affiliated brand names, including Six Flags Great Adventure, Cedar Point, Knott's Berry Farm and Kings Island.

The company serves guests primarily in the United States, as well as in Canada and Mexico.

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