The firm operates many theme parks including SeaWorld (three locations), Busch Gardens (two locations), Aquatica (three locations), Discovery Cove (one location) and Sesame Place (the only U.S. theme park based on Sesame Street).
Obviously, business dried up to next to nothing during the worst of the shutdowns (revenues of just $18 million in Q2 of last year) but it’s all about the recent recovery and the prospects for a travel boom now that the pandemic is mostly in the rearview mirror.
Of course, there’s already been a solid uptick in business of late as things open up, though interestingly, a lot of that is due to higher revenues per customer — attendees in Q1 were still down 4.5% from the year before, but revenues were up 12% thanks to much higher ticket prices (up nearly 11%) and in-park spending (up 26% per customer).
Moreover, while earnings were deep in the red, they crushed expectations (per-share 57 cent loss vs. loss of 78 cents expected) and adjusted cash flow was around breakeven, which gives you a sense of the earnings power as the world turns right side up and as attendance limits are lifted.
Indeed, management said Q1 attendance would have been “notably higher” if not for limits that were in place and said trends vs 2019 were improving as of early May.
Analysts have been ratcheting up their estimates, with 81 cents of earnings now expected this year and $2.61 next, compared to estimates of a loss of 24 cents and a profit of $1.97 (respectively) two months ago. It’s likely even those figures will prove conservative as Americans make up for lost time on the travel front.
Technically, SEAS has certainly already had a big recovery during the past year, so you can’t rule out the fact that the boom times that are coming have already been discounted.
But the stock certainly isn’t acting like the sellers are gaining traction — SEAS has built a base-on-base formation since early March, with next to no selling volume on the weekly chart, and shares stretched to new highs today on good (not great) volume. We think it’s buyable around here.