October will probably be an vital month for amusement park shares, in keeping with KeyBanc Capital Markets, as attendance to this point this yr has been sluggish.
Attendance at parks operated by Cedar Honest, L.P. (NYSE:FUN), SeaWorld Leisure, Inc. (NYSE:SEAS), and Six Flags Leisure Company (NYSE:SIX) stays properly under 2019 ranges. This partly explains why the shares have lagged the broader market in current months. The newest projected attendance knowledge reveals that underperformance may proceed.
KeyBanc’s outlook isn’t so sanguine. It lowered its Q3 attendance estimate to -4% yr over yr, from -2.5% prior.
Within the third quarter, the agency tasks Cedar Honest (FUN) will see a drop in attendance of 4% YoY — steeper than the anticipated -3.0%. In response, KeyBanc trimmed their income and EBITDA projections for Q3.
Attendance at SeaWorld (SEAS) may slip by 3.5% YoY, additionally steeper than the anticipated -2.7% YoY. Weak point might be defined by the recent climate and a hurricane in Florida, dwelling of one of many firm’s largest parks. Analysts barely lowered income and EBITDA forecasts.
KeyBanc sees Six Flags (SIX) reporting a 13% YoY surge in attendance, beating expectations of 12.7%. This might lead to a small enhance in income and EBITDA forecasts. However the financial institution stays involved concerning the inventory given knowledge exhibiting common buyer on-site spending is down about 4.5% in comparison with a yr in the past.
General, the agency sees important dangers for the sector. Amusement parks do finest in a robust financial system. Analysts foresee the potential for a deteriorating macroeconomic setting. If a recession hits, many customers will skip visits to their favourite curler coaster.
Unhealthy climate is one other threat. Unseasonably sizzling or chilly climate reduces attendance. So does rain or pure disasters. KeyBanc analysts additionally famous that there are distant dangers of pandemic-related park disruptions or shutdowns.
Regardless of the dangers, there may be some upside within the sector.
KeyBanc’s worth goal for Cedar (FUN) is $49, about 36% above the current worth. The potential for Six Flags (SIX) can also be 36% primarily based on the financial institution’s $31 worth goal. Due to uncertainty related to the corporate’s outlook, KeyBanc doesn’t have a worth goal for SeaWorld (SEAS).
