Six Flags misses targets, anylsts downgrade plummeting stock

Posted Tuesday, August 13, 2002 7:12 AM | Contributed by MForceXtreme

Six Flags released its second quarter earning results yesterday, missing alaysts' expectations by of 17 cents per share by 9 cents. Analysts down-graded the stock this morning, which subsequently droped as low as $4.75 after closing at $11.86 yesterday. In their earnings release and today's conference call, the company said it is not optimisitc about reaching its yearly targets.

Read the Six Flags press release from Business Wire via Yahoo and the report from Dow Jones Business News.

Tuesday, August 13, 2002 7:40 AM

Wow... volume is 12 million shares before lunch time. Sure seems like a knee-jerk reaction to me. Yeah, they had a bad quarter, but I don't see a reason to just give up on it like this. People are so damn paranoid right now.

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Jeff - Webmaster/Admin - CoasterBuzz.com, Sillynonsense.com
"Let's stop saying 'don't quote me,' because if no one quotes you, you probably haven't said a thing worth saying." - Dogma, KMFDM

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Tuesday, August 13, 2002 8:00 AM
Agreed. It's actually tempting to BUY some in the firesale...

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--Greg
"Now all I want is to find a way home, to warn Earth -- look upward, and share the wonders I see..."
My page

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Tuesday, August 13, 2002 8:01 AM

I agree Jeff, now is the time to get in and buy. That stock will go back up soon. They already mentioned their August numbers were better than expected and they expected 4th quarter losses to be less than last years. It makes sense because almost ALL of their parks have Halloween events now and they are becoming popular.

Also, for those of you that don't believe that SF has 4 "tier one" parks that generate most of the money, here you go. They mentioned that 4 parks generate a third of their revenue. These parks are SFGrAM, SFMM, SFGADV, and SFOT.... They also mentioned that they were really going to put alot of money into the Cleveland market, which is good to hear.

And finally, several smaller parks were mentioned as to be having "stellar" years. These mentioned were Denver(SFEG), Louisville(SFKK), St. Louis(SFSTL), and DC(SFA), even little or no "cap-ex".

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Theme parks will NEVER be the same!

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Tuesday, August 13, 2002 8:27 AM

The sell off isn't that much of a surprise. Looks like analysts were just itching for a reason to downgrade the stock and start the sell off.

From CBS MarketWatch..

"Bear Staerns Jason Ader cut Six Flags from 'buy' to 'neutral,' noting that this is 'the third season in a row of missed expectations and no material change in earnings since 2000.' Ader sees 'little long-term growth in the company's core business and therefore...the stock warrants more of a trading strategy on the seasonality of the shares, rather than a buy-and-hold approach.'"

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Tuesday, August 13, 2002 8:41 AM

"They had a bad quarter"

Yes, but when was the last time Six Flags actually had a good one? It's a company that earns a lot, but also consistantly borrows and spends more than it earns.

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Tuesday, August 13, 2002 9:30 AM

Six Flags is now paying the price for expansion, and they will continue to do so until all of their spending pays off in a few years.

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Tuesday, August 13, 2002 9:34 AM
I wonder how many New for 2003 attractions may get canceled after this.

Probally not very many.

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Tuesday, August 13, 2002 9:52 AM

I think the only thing they're paying the price for is investors being emotional. Give me a break. With all of the debt they've acquired the last few years is it any shock that they aren't making it back instantly? The economy hasn't been great so I don't expect a company that relies on discretionary income to slam home the dollars (which is why I'm surprised the FUN and Holiday World are doing well in spite of this).

It looks like the price has leveled off for the day, but they might beat Microsoft for volume. This panic is stupid. Buy now my friends... buy virtually anything that doesn't spell certain doom. A year from now you'll be glad you did.

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Jeff - Webmaster/Admin - CoasterBuzz.com, Sillynonsense.com
"Let's stop saying 'don't quote me,' because if no one quotes you, you probably haven't said a thing worth saying." - Dogma, KMFDM

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Tuesday, August 13, 2002 10:55 AM
I believe the reason Fun & Holiday are doing so well is becuase they have great guest relations. Six Flags cares about one thing, $$$ and it shows!
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Tuesday, August 13, 2002 10:55 AM
It doesn't matter how much money they put into their Cleveland market. If they keep treating their customers like dirt then they will not return.

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My fellow Americans; Let's Roll!
Woodencoaster.com
The World of Thrills

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Tuesday, August 13, 2002 10:58 AM
I'll tell you one thing, I'm buying PKS today.
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Tuesday, August 13, 2002 10:58 AM

It's not a panic, it's an adjustment to reality. This stock has been trading much higher than has ever been warranted. Even at this level, are you willing to pay $6/share of your money for every $0/share that Six Flags makes?

Anyone who buys this stock now is a fool. Especially on the advice of people who don't look at the numbers. Every analyst I see today that has a say on the stock says "no interest." If you think selling stock based on emotions is stupid, what do you think buying on emotions is called? I call it gambling. And with terrible odds. That is really stupid.

Premier is a bad management company. Plain and simple. Six Flags has never posted a profit under their ownership, and I doubt they ever will.

Like I said on this board 3 months ago when Premier drove Arrow into bankruptcy, Six Flags is a couple seasons of bad weather away from Chapter 11. This year isn't even subject to bad weather! I don't think SFMM has seen 1 day of rain in 2002! The park has been packed, even sans X! Hurricane Harbor has been at capacity most of the summer!

If they blame economic uncertainties for bad performance, how does Holiday World see a record season? How does Cedar Fair report higher numbers? It's B.S. That's how. Premier has always blamed something out of their control -- weather, terrorism, etc. Premier is a terrible management company. They just don't understand their product, how to price it, and how to plan for the future. Chapter 11 by 2004! Mark my words!

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Tuesday, August 13, 2002 11:12 AM

You know, I ain't saying a panic sell-off is a good thing, but ...

Actually, wait a minute. This doesn't even really look like a panic sell at all. Granted, investors are very jittery right now, and are much more likely to jettison underpreformers than, say, a year ago. But this is pretty much a typical reaction to a stock that doesn't make estimates, even in a boom. Failing to meet dividend expectations will ineviatably lead to a fall in unit value, which is why large companies issue warnings to stave off wide-spread dumping.

And keep in mind this is a serious per-share shortfall - the dividends will end up being less than 50% of forecasts. That's awfully significant ...

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Age and treachery will always overcome youth and skill.

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Tuesday, August 13, 2002 11:26 AM
I'm not going to be a long with this stock. I agree with the dude about BK in a few seasons. But I never overlook the chance to make some $$ on some day trades.
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Tuesday, August 13, 2002 11:28 AM

You know, it's not called Premier anymore... they shed that name years ago now. And they aren't a management company, they own their parks. But anyway...

Prodjbp: No, all any company cares about is money, it's just that some companies realize that getting more of it has something to do with outstanding customer service.

Analysts are analysts. I read the financials, and while I'm not a whiz at macroeconomics, I can see they're doing their best to control costs and scaling back cap ex. Attendance is down but it's offset by per capita spending (the exact opposite of what Cedar Fair is doing). Regardless of how poorly managed some of their parks might be, the slump won't last forever. Even the analysts that cut the company's rating didn't drop it to sell, and one had a target price of $11 for the year, a lot closer to what it was trading for last week.

I don't disagree that the company, especially at the local level in some places, is poorly managed. I don't disagree that they have a ton of debt (which they are slowly paying back). I don't disagree that FUN is a better buy (I bought more at $21.75 today :)). However, this downward spiral isn't warranted for any stock unless the company is headed for certain doom, and I'm not convinced it is.

If I were on the board I'd ditch the lawyer-banker from the top and get a real industry guy in there.

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Jeff - Webmaster/Admin - CoasterBuzz.com, Sillynonsense.com
"Let's stop saying 'don't quote me,' because if no one quotes you, you probably haven't said a thing worth saying." - Dogma, KMFDM

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Tuesday, August 13, 2002 12:21 PM

We could always stage a lynching for Mr Kieran.

(this is a joke, not a death threat)

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Tuesday, August 13, 2002 12:52 PM

A "sell" rating? Haven't since one of those since sometime in the '90's. Hold is as bad as it gets nowadays. Missed earnings by 50% How is that possible?

Attendance is down? Can't prove it by what I've seen at GAm this year but I'll take their word for it. Which three parks? Since SF refuses to release attendance data for specific parks, this is pretty worthless as an explanation, IMO. But what do I know.

Do I think SF is in trouble? No. But I do think it's gonna get worse before it gets better.

Short PKS. This is not an investment opportunity.

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Tuesday, August 13, 2002 12:52 PM
dude said: "Anyone who buys this stock now is a fool. Especially on the advice of people who don't look at the numbers. Every analyst I see today that has a say on the stock says "no interest." If you think selling stock based on emotions is stupid, what do you think buying on emotions is called? I call it gambling. And with terrible odds. That is really stupid."
Are these the same analyst who consistantly underperform their benchmark indicies? The *one* thing that I have learned in my "very brief" study of the financial industry is that most everyone has an opinion and in the long run almost all of them are wrong.

But at the prices PKS (and Disney for that matter) are selling and the very nature of their businesses (Disney being harder to analyze because they are so diverse) it's not much of a stretch to pick them up now.

And if you hadn't realized that one is buying PKS for *growth* as opposed to buying it for *income* as one would FUN, they I *really* discount any opinion you have on financial matters.
jeremy

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"To get inside this head of mine, would take a monkey-wrench, and a lot of wine" Res How I Do

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Tuesday, August 13, 2002 12:59 PM
The weather in Geauga County, Ohio (Six Flags of Ohio) has been very nice for most of summer. Now the much needed rain is coming. Cedar Point is in the exact same market and is having better results (and no doubt gets much worse weather being directly on the lake) and does not have the marketing advantage of a sea life park. Economic uncertainties? Exactly. You charge $40 per head and give your customers a reason to take their business elsewhere (Cedar Fairs attendance increase?) Potential terrorism? I'll let Disney have that excuse. Six Flags is a chain of regional parks, not destination. The local population should not be afraid to drive to Six Flags (until they meet the toll booth). The truth is hard enough for corporate to accept. Their park, company, and brand's reputation is in the crapper and people (investors and customers) are not happy.

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My fellow Americans; Let's Roll!
Woodencoaster.com
The World of Thrills

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