09/17/2020

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Regional Theme Parks Could Rebound More Quickly Than Their National Competitors



Consumers Prefer Attractions Close to Home


Regional theme park stocks may be poised for success as locations begin to reopen across the country. Some analysts believe Six Flags (SIX), SeaWorld (SEAS), and Cedar Fair (FUN) could see an increase in attendance as families who have been stuck inside seek out nearby fun that doesn’t require the cost and risk of a plane flight and hotel.

This could be good news for theme parks hoping to recover from coronavirus-related closures. When lockdown restrictions were first set in place and parks were forced to close their gates to visitors, many of their stock prices fell as much as 80%. Thankfully, as locations slowly begin to reopen, most regional theme park stocks have more than doubled after bottoming out in March.

Projected Cash Flow Increases for The Big Three


Eric Wold, an analyst at B. Riley FBR, took a closer look at the three major regional theme parks, giving both Cedar Fair and Six Flags a “neutral” rating and SeaWorld a “buy” rating.

Cedar Fair is based in Ohio but has parks in other states as well, which means it could benefit from regional travel. Wold gave the company a $42 price target and anticipates its adjusted cash flow growing by 25% from $376 million in 2021 to $472 million in 2022.

Six Flags may also benefit from having multiple regional locations. Most of their parks will reopen in July, but five will open this month. The company was given a price target of $27 and a projected cash flow increase of 22% from $368 million in 2021 to $450 million in 2022.

Finally, SeaWorld, which also owns Busch Gardens, has already begun opening locations and plans to continue by opening Busch Gardens Williamsburg on June 25. Wold projects the company will increase cash flows by nearly 25%, growing from $329 million in 2021 to $410 million in 2022.

Park Attendance Levels Could Still Take Years to Recover


Even though cash flow is expected to increase for these three companies, it may take years for the amusement parks to bounce back completely from losses during the shutdown.

As guests adjust to new rules about social distancing, there could be up to a 90% decline in attendance this June compared to last June.

Regardless of the uphill climb, regional theme parks may rebound faster over the coming months than their larger national competitors like Disney World (DIS) or Universal Orlando. Most analysts agree that people are eager to return to some normal activities post-quarantine, but most may not yet be ready to travel far from home.


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