Six Flags Not Flying Over This Dog

An early Easter helped Six Flags (SIX) narrow Q1 losses and boost revenue 35%. However, the net loss, $149.9 million, was wider than expected. Revenue was helped by higher guest attendance and higher guest spending.

SMH Capital maintains a BUY on Six Flags (SIX) and sees Americans seeking out regional entertainment options at lower costs. They heard a positive tone in the March Quarter call. CRT Capital, meanwhile, thinks SIX is a dog, maintaining a SELL and citing an unsustainable amount of debt and financial risk. They considered the Q1 results irrevelvant as a result.

The balance sheet problems and weakening consumer spending make us sceptical about the bull logic. Six Flags is not exactly the Wal-Mart of entertainment options. Guest spending at Six Flags is $38.95 per person, not including the outrageous gas consumed on the way there and back.

From Reuters:

The company reported a net loss of $149.9 million, or $1.62 per share, compared with a net loss of $170.6 million, or $1.86 per share in the year-ago period.

First-quarter revenue rose 35 per cent to $68.2 million from $50.6 million in the year-ago quarter.

Analysts, on average, had expected a loss of $1.52 on revenue of $58 million, according to Reuters Estimates.


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