Six Flags Entertainment

With the change to daylight saving time and the approaching warmer temperatures, it's time to start thinking about spring vacation. For anyone that's a kid at heart or has kids still living at home, that means a trip to an amusement park. And for most Americans, that means a trip to one of the many Six Flags Theme Parks. 

Six Flags is the world's largest amusement park corporation with properties in Mexico, the US and Canada. The company maintains 18 properties throughout North America consisting of theme parks, thrill parks, water parks, and family entertainment centers. The company was founded in Texas and took its name from its first property, Six Flag Over Texas. In 2009, Six Flags hosted 23.9 million guests but still ran into financial problems and on June 13, 2009, the corporation filed for Chapter 11 bankruptcy protection. On May 3, 2010 Six Flags successfully exited bankruptcy, restructured the company, and issued new stock on the NYSE. Below is a list of the company's amusement parks, water parks, and its one indoor water entertainment park.

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Amusement Parks
Great Escape,  Queensbury, New York
La Ronde,  Montreal, Quebec, Canada
Six Flags America, Largo, Maryland
Six Flags Discovery Kingdom, Vallejo, California
Six Flags Fiesta Texas, San Antonio, Texas
Six Flags Great Adventure, Jackson, New Jersey
Six Flags Wild Safari,  now part of Six Flags Great Adventure
Six Flags Great America, Gurnee, Illinois
Six Flags Magic Mountain, Valencia, California
Six Flags México, Mexico City, Mexico
Six Flags New England, Agawam, Massachusetts
Six Flags Over Georgia, Austell, Georgia
Six Flags Over Texas, Arlington, Texas
Six Flags St. Louis, Eureka, Missouri

Water Parks
Six Flags Hurricane Harbor, Mitchellville, Maryland
Six Flags Hurricane Harbor, Gurnee, Illinois
Six Flags Hurricane Harbor, Agawam, Massachusetts
Six Flags Hurricane Harbor, Austell, Georgia
Six Flags Hurricane Harbor, Eureka, Missouri
Splashwater Kingdom, Queensbury, New York
White Water Bay, San Antonio, Texas
Six Flags Hurricane Harbor, Valencia, California
Six Flags Hurricane Harbor, Arlington, Texas
Six Flags Hurricane Harbor, Jackson, New Jersey
Six Flags White Water, Marietta, Georgia

Indoor Water Park
White Water Bay, Queensbury, New York

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Today's Numbers

8 March 2015
Price  $45.97
1yr Target  $53.00
Analysts  5
1yr Cap Gain  15.29%
Dividend  $1.93
Yield  4.19%
1yr Tot Return  19.48%

Beta  1.23
EPS (ttm)  $0.73
EPS next yr  $1.71
P/E  62.97
PEG  7.87
ROA  2.90%
ROE  26.40%
ROI  11.20%

Revenues, Earnings and Dividends Since 2010

Now let's see how Six Flags Entertainment has done since exiting bankruptcy as essentially a brand new company. Revenues have been on a steady increase for the last four years and they are estimated to continue to increase 5.98% in 2015 to $1.24 Billion and another 4.03% in 2016 to $1.29 Billion. This is extremely positive because these estimates are based on an increase in attendance going forward and/or the company's ability to increase ticket prices. Depending on the economy, these estimates may be revised upward.

Dividends have also increased steadily over the last four years and are estimated to continue to increase in the next two years. This is good but the payouts are larger than earnings but decreasing in percentage over the next two years. The real problem with the fundamentals lies in the earnings. The earnings have been very volatile since the reorganization and unless management gets these under control they'll once again have financial problems. Looking forward estimates show a slow and steady increase in earnings, but these are only estimates. If this occurs the company is heading in the right direction. Anyone investing in these shares will need to monitor the company's earnings announcements to ensure earnings are as estimated. 
   

Year
2016 Est
2015 Est 
2014
2013
2012
2011
2010

Revenues
$1.29 Bil
$1.24 Bil
$1.17 Bil
$1.10 Bil
$1.07 Bil
$1.01 Bil
$0.97 Bil

Earnings
$1.71
$1.54
$0.77
$1.18
$3.30
$-0.21
$3.25

Dividends
$2.20
$2.08
$1.93
$1.82
$1.35
$0.90
$0.30

Payout Ratio
128.65%
135.06%
250.64%
154.23%
40.90%
Unk
9.23%

Growth Since 2010

For those investors that got in after the reorganization, this has been a very lucrative investment. A $10,000 investment in this company in 2010 would be worth $55,918 today. That's and average annual growth rate of approximately 53 percent. Looking at the dividends above and assuming that the dividend payout in 2010 was a partial year distribution, a three year dividend growth rate (2011-2014) of 28.63% is phenomenal. Obviously that won't continue going forward but it does show that management is serious about sharing profits with it shareholders.   

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The Competition

Six Flags Entertainment Corporation is part of the General Entertainment Industry which is part of the Services Sector of the economy. Below is a list of the major corporations in this industry that pay a dividend. They are listed in the order of their market capitalization.

1. Six Flags Entertainment Corporation  (SIX)
2. Cedar Fair, LP  (FUN)

Conclusion

There's a place in everyone's portfolio for entertainment. For those who visit my site often they know that I believe entertainment is a large portion of everyone's budget these days and going forward it'll only become a bigger part. And while entertainment is a hugely broad area including television, film, the internet and others, I still feel that the family vacation is still high on the list of activities pursued by every family. As a result I feel that Entertainment Parks are part of that activity. 

For me the pure plays are Cedar Fair and Six Flags, so investors looking for a pure investment in parks should look at these. There are other amusement parks but they are folded up under large corporations like Disney and Comcast that need to be analyzed differently.  

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