Six Flags stock downgraded on news of down earnings

Posted Thursday, August 14, 2003 5:01 AM | Contributed by Jeff

Shares of Six Flags Inc. fell on Wednesday, a day after the regional theme park operator posted a quarterly loss and said full-year adjusted earnings would trail 2002 by about 15 percent. One brokerage downgraded the stock from "hold" to "sell."

Read more from Reuters.

Thursday, August 14, 2003 5:27 AM
Hey, how about a "buy one goet one free sale?" If you buy the Universal chain, we will throw in Six Flags at no additional charge!

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Thursday, August 14, 2003 5:36 AM
Maybe they need another rumor to raise the stock back up.

In looking at my update of stock prices:

FUN $26.20 (Cedar Fair)

DIS $22.50 (Disney)

PKS $4.44 (Six Flags)

Well, that says a lot right there.

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Thursday, August 14, 2003 6:07 AM
While that does say a lot, if you're really interested, look at how those three have performed over the past years. Only one has done well.

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- "I used to be in the audio/visual club, but I was kicked out because of my views on Vietnam........and I was stealing projectors" - Homer Simpson

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Thursday, August 14, 2003 7:50 AM
One thing I have never understood though, why "sell" a stock that is doing poorly? I can understand not "buy"ing any more if you dont see things looking up, but unless the company is in danger of going under, why sell? The *only* reason I can imagine is just to lower your takes :)

Someone please explain.
lata, jeremy
--who wonders where were the "sell" announcements when the stock was above seven dollars...

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Thursday, August 14, 2003 8:12 AM
CPLady's avatar Actually, if you sell now, you are likely selling at a loss. but BUYING when the stock is low could net you a profit in the long term.

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I'd rather die living than live like I'm dead
http://www.webtechnik.com/ebony/CPLady.htm

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Thursday, August 14, 2003 8:36 AM
I can tell you I for one am definetly buying right now. I also think it will take about one more year before they recover from the whole "Six Flags Taking Over The World Campaign" ;)

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"The Future of Roller Coasters"
-RollerCoasterGod
OhioThemeParks.com

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Thursday, August 14, 2003 8:47 AM
Jeff's avatar I see another dip in stock prices when they announce year-end earnings. That kind of will make it "real." I can't imagine things will continue to go south forever though, so maybe January would be a good time to buy.

There's a pretty big sign things aren't going well here in Cleveland. You don't give out two-for-one deals on Coke cans and at McDonald's in the middle of August unless you're seriously hurting. That's supposed to be the time of year you've got all the business you can handle.

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Jeff - Webmaster/Admin - CoasterBuzz.com - Sillynonsense.com
DELETED! What time does the water show start?

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Thursday, August 14, 2003 12:35 PM
This is SF your talking about, I looked at the Amusement Today that just got a day or 2 ago, and checked the stocks in the beck (the only time I really pay attention to stock) and SF looked really pathetic. The largest theme park chain in the world (with some of the largest prices), and stock averaging at less then a quater of any other stock mentioned on there....*** This post was edited by P18 8/14/2003 4:36:07 PM ***
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Thursday, August 14, 2003 12:35 PM
Wahoo Skipper said:

"In looking at my update of stock prices:

FUN $26.20 (Cedar Fair)

DIS $22.50 (Disney)

PKS $4.44 (Six Flags)

Well, that says a lot right there."


Actually this says nothing Wahoo, other than what a single share of each company costs. The price of one share of PKS compared to the price of 1 share of any other publicly traded company means nothing. Unless, of course the 2 companies have exactly the same number of outstanding shares. Without even looking, I'm confident that this is not the case.

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Thursday, August 14, 2003 5:01 PM
Jeff's avatar OK smartypants, let's talk about the market cap:

FUN: $1.35 billion
DIS: $46.09 billion
PKS: $431.5 million

Anyone find it troubling that a company as large as Six Flags has a market cap that low?

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Jeff - Webmaster/Admin - CoasterBuzz.com - Sillynonsense.com
DELETED! What time does the water show start?

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Thursday, August 14, 2003 8:08 PM
First of all, I think we can all agree that simply looking at the price of a stock tells you NOTHING. Does the stock pay dividends? Has the stock split? Can you imagine what one share of Microsoft would cost today if it hadn't? (Coincidentally, I think Cedar Fair LP pays a dividend of 0.44/share, but I'm not certain).

Several market analysts have recently been CONVICTED for feeding the public incorrect and/or inaccurate information. Buying and selling stocks is risky business. A downgrade to a "sell" simply means that the price of the stock is likely to go lower. True, buying low and selling high is the ideal situation. Look at the SECTOR ANALYSIS of the amusement industry currently yields confusing results; the economy is currently poor, and discretionary spending is down. Therefore, a downgrade of Six Flags, or any other amusement industry stock, may make sense in light of the current economic situation. Some people don't think this way, and indeed want to hold (or even BUY) stocks when they are low.

Looking at the MARKET CAP (Jeff) i.e., MARKET CAPITALIZATION (= stock price x outstanding stock), in other words, what the whole kitty is worth, isn't an effective way to analyze the market either. It's one component, and that's all. The balance sheet for Six Flags probably does look troubling however. As for picking out Six Flags and saying how poorly they are doing, you can highlight poor performance for any company in the amusement industry at the present time. For example, Cedar Fair LP (NYSE: FUN) ended it's 3/31/03 quarter DOWN 10% to 21.5 million (coincidentally, this was due to lower earlier season attendance at Knotts Berry Farm, but I digress). Furthermore, in the last SIX MONTHS, only ONE INSIDER BUY (i.e., someone who knows this SECTOR well) of FUN was ever made (>1000 shares). This isn't good news to me, and is a harbinger to me that the sector analysis for the amusement industry is currently gloomy. Poor weather across much of the midwest has undoubtedly contributed to poor sector performance this year as well.



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"That's DOCTOR Evil. I didn't spend six years in evil medical school to be called 'Mr. Thank You Very Much.'"
*** This post was edited by ophthodoc 8/15/2003 12:09:53 AM ***

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Friday, August 15, 2003 4:28 AM
Jeff's avatar As an investor, market cap is a relevant metric, because it reflects what investors think the company is worth. What the company is worth is obviously important if you're going to invest in it! Dividends/distribution is also important (and yes, FUN is .44/unit/quarter).

But to say the "sector" (and I hesitate to call it that with only two pure industry players... Disney, Vivendi and Busch are all in too many other things) is depressed is I think incorrect. We've got two new projects in the works (Council Bluffs and Myrtle Beach) and a new park just opened (Celebration City). The independents are having one good year after another, some of the Cedar Fair and Six Flags properties are having a good year, and last year, when we were allegedly deeper in recession, Cedar Fair had modest gains. Just from casual observation, I bet CF's year end will be down, but only by single-digit percentages. Weather has been significantly better in August.

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Jeff - Webmaster/Admin - CoasterBuzz.com - Sillynonsense.com
DELETED! What time does the water show start?

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Friday, August 15, 2003 5:54 AM
Market cap only tells me how actively a company is traded; for example, I may not want to invest in a smaller cap company because I may not be able to unload stocks if I wanted to; a "big cap" company is more active. By sector analysis I am talking about the travel/leisure industry as a whole, not strictly amusement parks. Disney, for example, has diversified themselves from the beginning and protected their position (i.e., they are currently doing well on their films). To site Disney though as an example of the amusement industry's recent performance is an imperfect example, as you (correctly) pointed out.

Looking at sliding weighted 30-week averages of the travel/leisure industry through various sources has shown widespread loss over the past several quarters, or indeed since 9/11 according to some. On the other hand, some analysts have predicted steady gains for the industry despite a withering economy. Emphasis on physical fitness and wellness in general has placed a new emphasis on spending in this industry. However, anecdotal examples of independents "doing well," as you say, mean nothing to me or for the industry as a whole. I personally wouldn't be investing in this sector at the present time, but if you can make a go of it, good for you.

*Edit: In reference to the Six Flags issue and loss it has sustained, another option a person with a large portfolio might consider would be to write a (covered) CALL OPTION to protect their position. But that's going beyond the scope here.
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"That's DOCTOR Evil. I didn't spend six years in evil medical school to be called 'Mr. Thank You Very Much.'"
*** This post was edited by ophthodoc 8/15/2003 10:29:59 AM ***

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Friday, August 15, 2003 6:37 AM
Is it just me or is it just crazy that time after time Six Flags reports poor performance...the stock drops a little, but by the end of this last one, the stock went higher!! Not much, but still. With no sign of recovery for the parks and the debt coming due soon, it makes no sense to me. I would not advise investing in SF, but CF would be wise. They pay dividends and have held pretty well on the stock price. Something has to happen with SF soon as we all know. I think they got lucky that the weather was bad this year. And I don't believe the economy is a big factor on why SF (and for that matter most parks) are down this year. Pricing is getting higher and higher. $10+ for parking, $40+ for admission, $10+ for parking, $7+ for a McD's burger and fries, $3+ for a single game! Come on...I know things in most parks are now corporate and bottom line driven but really now! I have always believed in the WalMart philosophy of lower prices=more sales=higher profits. I was at SFOG a month ago and spent very little...$3 for a lemonade and being a games guy, it was hard for me not to play. Actually, easy since it was $3!
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Friday, August 15, 2003 9:14 AM
I agree with Shawn completely, if that matters to anyone...
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Sunday, August 17, 2003 10:31 AM
OK smartypants, let's talk about the market cap:

FUN: $1.35 billion
DIS: $46.09 billion
PKS: $431.5 million

Anyone find it troubling that a company as large as Six Flags has a market cap that low?

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Jeff - Webmaster/Admin - CoasterBuzz.com - Sillynonsense.com
DELETED! What time does the water show start?

It says that PKS is not the #1 perfromer in the market of amusement/theme parks. Is it fair to compare Disney they have more business ventures than CedarFair and Six Flags.

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