SeaWorld Entertainment (SEAS) shares are strong out of the gate, gaining over 20% since its IPO last friday. The company debuted with shares priced at $27 a pop, valuing the company at just over $3 billion.
Money raised from the IPO will allow SEAS to delever and retire some of its term loans. The company already manages 11 parks and cares for over 67,000 animals. With more financial flexibility, other projects will soon be coming into fruition such as a new water park in San Diego, more mobile apps, and other tie ins.
So why is there a penguin at the NYSE? SeaWorld Orlando plans to open an antarctica themed attraction in May that features a huge penguin habitat. CEO Jim Atchison calls it a truly "cool" experience.
Business Section: Investing Ideas
The past is behind SeaWorld. Blackstone (BX) bought the company from Anheuser-Busch (BUD) in 2009 in a time when SeaWorld parks had declining visitors and whales were turning on their trainers. Blackstone, as typical with private equity, loaded SeaWorld with cheap debt.
Investors, tread carefully. SeaWorld has a number of competitive strengths that belie its financial health. SeaWorld is clearly differentiated from other major parks and is one of the few pure plays in this industry. Universal Parks (owned by Comcast, CMCSA) and Disney (DIS) are both part of diversified entertainment companies worth over $100 billion.
SeaWorld has a lot of growth opportunity with exciting new attraction ideas and is trying to put itself in better financial health but its current ratio is still below 1 at 0.83. The company has roughly $1.7 billion of debt on the balance sheet. For a company that is expanding its number of water parks, SeaWorld will have to manage its liquidity in every sense of the word.
List of related companies:
1. SeaWorld Entertainment Inc. (SEAS, Earnings, Analysts, Financials): Operates regional theme parks, licenses a portfolio of brands, and other media, entertainment, and consumer products. Market cap at $3.04B, most recent closing price at $32.92.
SeaWorld is more than just orcas and waterslides. The company owns, operates, and/or licenses SeaWorld, Shamu, Busch Gardens, and a number of regional water parks. SeaWorld has destinations across the United States but is concentrated in California and Florida.
Cedar Fair and Six Flags, below, are the closest comparables to SeaWorld with similar sizes and operations.
2. Cedar Fair, L.P. (FUN, Earnings, Analysts, Financials): Operates amusement and water parks in the United States and Canada. Market cap at $2.35B, most recent closing price at $42.30.
Cedar Fair, in addition to its flagship parks, owns and operates Paramount Parks after purchasing them from CBS.
3. Six Flags Entertainment Corporation (SIX, Earnings, Analysts, Financials): Operates regional theme, water, and zoological parks in North America. Market cap at $3.8B, most recent closing price at $77.11.
The rest of the companies in this list are also in the amusement park business but are significantly larger with more diversified holdings.
4. Comcast Corporation (CMCSA, Earnings, Analysts, Financials): Provides entertainment, information, and communications products and services in the United States and internationally. Market cap at $106.41B, most recent closing price at $40.47.
5. Walt Disney Co. (DIS, Earnings, Analysts, Financials): Operates as an entertainment company worldwide. Market cap at $111.96B, most recent closing price at $62.01.
6. Hershey Co. (HSY, Earnings, Analysts, Financials): Engages in manufacturing, marketing, selling, and distributing various chocolate and confectionery products, pantry items, and gum and mint refreshment products worldwide. Market cap at $20.2B, most recent closing price at $90.34.
Hershey is better known as a chocolate manufacturer but the company also runs its own amusement park.
--Freda Ding (Data sourced from Marketwatch.com)
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