It’s been a sad week for Six Flags Entertainment Corporation (NYSE:SIX), who’ve watched their investment drop 17% to US$32.63 in the week since the company reported its annual result. Revenues were in line with forecasts, at US$1.5b, although statutory earnings per share came in 12% below what analysts expected, at US$2.11 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts’ statutory forecasts suggest is in store for next year.
Following last week’s earnings report, Six Flags Entertainment’s eleven analysts are forecasting 2020 revenues to be US$1.47b, approximately in line with the last 12 months. Statutory earnings per share are expected to sink 19% to US$1.71 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.49b and earnings per share (EPS) of US$2.41 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
It might be a surprise to learn that the consensus price target fell 10% to US$37.27, with analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Six Flags Entertainment analyst has a price target of US$63.00 per share, while the most pessimistic values it at US$28.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Six Flags Entertainment’s past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.9% a significant reduction from annual growth of 4.9% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 8.2% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – analysts also expect Six Flags Entertainment to grow slower than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Six Flags Entertainment. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Six Flags Entertainment’s revenues are expected to perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn’t be too quick to come to a conclusion on Six Flags Entertainment. Long-term earnings power is much more important than next year’s profits. We have forecasts for Six Flags Entertainment going out to 2022, and you can see them free on our platform here.
You can also see whether Six Flags Entertainment is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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