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S&P 500   4,288.05
DOW   33,507.50
QQQ   358.27
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S&P 500   4,288.05
DOW   33,507.50
QQQ   358.27
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Top Wellness Nasdaq Stock for 2023 (Ad)
PayPal Keeps Getting Cheaper; Should You Load Up?
What's Really Behind The FTC's Lawsuit Targeting of Amazon?
Top Wellness Nasdaq Stock for 2023 (Ad)
Delta Hopes to Soar Again with Customer Loyalty Tweaks
Is the Grinch Stealing This Year's Holiday Season Jobs?
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Hold On to Six Flags Stock But Wait For More Thrills Before You Buy

Hold On to Six Flags Stock But Wait For More Thrills Before You Buy

Six Flags (NYSE:SIX) reports earnings on February 24 and the news is not likely to be good. Analysts forecast negative earnings per share (EPS) of $1.02 on revenue of $87.04 million. The whisper number puts the EPS slightly lower at ($1.10). Does this signal that the company’s strong run is over?

Many investors would have seen Six Flags as an untouchable stock in 2020. The company had to close its entire network of theme parks in response to the Covid-19 pandemic. Still, investors that bought SIX stock at the depth of the pandemic have been rewarded with a gain of nearly 270%. And the company’s leading competitor Cedar Fair (NYSE:FUN) is up 256% in the same period.

This is not just a contrarian play. Six Flags successfully worked with its lenders to renegotiate key leverage covenants. This will ensure that the company can successfully reopen with some extra time to recover from the effects of the pandemic.

Does a Template for Reopening Exist?

Some believe that Disney’s (NYSE:DIS) reopening of Walt Disney World in Florida can provide a template for Six Flags to reopen. Keep in mind, even as more people are vaccinated, public health experts are cautioning that many of the measures that were taken during the pandemic may still be required as the country reopens.


And the reality is that many potential customers will demand that theme parks take these measures even when the immediate threat of the pandemic is long gone.

Disney has largely been praised for the measures it has taken. And, although this is difficult to conclusively prove, there has been no direct evidence that the re-opening of Disney World has led to community spread.

The Easy Gains Are Gone

However, putting the debt issue aside, most of the stock’s gain is in anticipation that the company would be able to reopen its parks for the 2021 season. And the company is planning to do just that. However, with the stock up 270% from its pandemic lows, the easy gains may be gone.

To justify a further rise in the company’s stock price, investors will want to see how much traffic will return. If the analysts’ estimates are accurate, Six Flags will deliver full-year 2020 revenue of approximately $337 million. With the parks re-opening, the company is almost assured of seeing higher revenue numbers. But it’s unlikely that it will be able to approach the $1.48 billion that Six Flags posted in 2019.

And investors aren’t likely to start getting that data until the second quarter. Six Flags is a predictably seasonal business, and the first quarter is historically a weak quarter. That will be the same for this year because parks won’t be reopening until the spring.

 Wait For More Data Before Adding to Your Position

With the stock looking overbought, I think SIX stock is likely to drop post-earnings as investors look to take profits. The stock is nearly 30% below its high price for 2019 despite the fact that revenue is unlikely to approximate those levels.

However what should happen and what will happen are two different things. Although I believe the easy gains are gone, traders still hold bullish sentiment on SIX stock. The stock closed at a new 52-week high on February 22, but the relative strength indicator (RSI) suggests the stock is overbought. That bullish sentiment may change after the earnings report. Investors will want to hear more about the company’s guidance regarding reopening.

I’d be interested in the stock if it gets between its 20-day and 50-day simple moving average. That would put the stock about where it was to start

Should you invest $1,000 in Six Flags Entertainment right now?

Before you consider Six Flags Entertainment, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Six Flags Entertainment wasn't on the list.

While Six Flags Entertainment currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Six Flags Entertainment (SIX)
2.762 of 5 stars
$23.51-1.5%N/A24.49Hold$30.00
Walt Disney (DIS)
3.181 of 5 stars
$81.06+1.2%2.17%65.90Moderate Buy$113.50
Cedar Fair (FUN)
2.955 of 5 stars
$37.01-0.1%3.24%8.12Moderate Buy$48.91
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Chris Markoch

About Chris Markoch

Contributing Author: Retirement, Individual Investing

Chris Markoch is a freelance financial copywriter with over five years of experience covering various aspects of the financial markets. You may find his writing a little different than other stock articles you’ve read. And that’s OK with him. Chris doesn’t have a traditional finance background. What he does bring to the table is a strong business and marketing background having worked for agencies that serviced Fortune 500 companies. With that in mind, he isn’t overly impressed with what companies say, and more focused on what they do. And because buyer behavior dictates so much of what happens with a stock, Chris always keeps the end consumer close in mind. Chris has been writing for MarketBeat since 2018.

Contact Chris Markoch via email at CTMarkoch@msn.com.

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