SeaWorld Entertainment Stock Can be Caught on the Downdraft

Theme park and entertainment company SeaWorld Entertainment (NYSE: SEAS) stock has sunk (-33%) for the year. The operator of SeaWorld and Busch Gardens theme parks has been in a recovery since the reopening after COVID lockdowns were pulled. Vaccinations have been the key to the rebound in attendance which jumped 53.7% in its fiscal Q1 2022 to 3.4 million guests as capacity limitations and social distancing restrictions were relieved. The Company believes there is further recovery due to the strong momentum still not reflecting a normalized environment. International groups are returning as the Company rolls out new attractions and bolsters staffing. Double-digit admission pricing increases have been implemented to mitigate inflationary pressures as its admissions per capita rose 2.5%. SeaWorld has improved the in-park experience with the enhancement of its mobile app which has nearly 1.4 million downloads enabling double-digit in-park and e-commerce purchases. Prudent investors seeking exposure in the theme park entertainment space can watch for opportunistic pullbacks in shares of SeaWorld Entertainment.

Q1 Fiscal 2022 Earnings Release

On May 12, 2022, Six Flags released its fiscal first-quarter 2022 results for the quarter ending March 2022. The Company reported an adjusted earnings-per-share (EPS) loss of ($0.12) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.14), beating estimates by $0.02. Revenues rose 57.5% year-over-year (YOY) to $270.70 million, beating analyst estimates for $263.23 million. Attendance increased by 1.2 million guests YoY to 3.4 million total guests, up 53.7%. Attendance rose 16.4% compared to Q1 2019 pre-pandemic. Adjusted EBITDA was a record $65.9 million, up 161.8% YoY. Total revenue per capita rose 2.5% to a record $79.54 YoY. The Company bought back 1.5 million shares of common stock for approximately $109.9 million. The Company came to the aid of over 300 animals in need in the wild. SeaWorld CEO Mark Swanson commented, “While our first quarter performance was strong and continued our momentum from 2021, we have scope for further recovery as it still does not yet reflect a normalized operating environment. In particular, international and group related visitation is improving, but was not yet back to pre-COVID levels and we have opportunities to improve staffing levels to capture even more in-park spending demand. We are also very fortunate to have an extremely strong balance sheet with $380.0 million of cash and cash equivalents, $745.3 million of total available liquidity and a LTM net total leverage ratio of only 2.4x.”

Conference Call Takeaways

CEO Swanson noted the strong momentum from 2021 accelerating into 2022 with record financial results. He feels there’s further recovery as its not yet reflected as a normalized operating environment. International travelers are returning, and pricing power is enabling the Company to offset inflationary cost pressures. The Company opened its first brand new theme park since 2013 Sesame Place San Diego Park. He addressed the debt concerns noting that LTM total leverage ratio has fallen below 2.5X as the Company has over $745 million in total available liquidity consisting of $380 million in cash. This enables SeaWorld to continue making opportunistic investments to bolster shareholder value. The labor market is still tight, but the Company is finding better ways to attract, motivate and retain talent including the use of international labor.

SEAS Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for SEAS stock. The weekly rifle chart collapsed put in a temporary bottom near the $41.11 Fibonacci (fib) level. The weekly downtrend has a falling 5-period moving average (MA) resistance at $51.72 followed by the 50-period MA at $60.14 and 15-period MA at $62.16. The weekly lower Bollinger Bands (BBs) sit at $41.98 as stochastic falls through the 20-band. The weekly 200-period MA sits at $36.91. The weekly market structure low (MSL) buy triggers on a breakout back up through $49.47. The daily rifle chart downtrend has a falling 5-period MA at $44.51 followed by the 15-period MA at $50.64. The daily lower BBs sit at $40.10 as the daily stochastic stalls at the 10-band. The daily 50-period MA sits at $59.40 and 200-period MA resistance sits at $62.10 overlapping with the daily upper BBs on the nose. Prudent investors can watch for opportunistic pullback levels at the $41.31 fib, $39.26 fib, $33.11 fib, $31.33 fib, $29.78 fib, and the $27.44 fib level. Upside trajectories range from the $55.21 fib level up towards the $70.34 fib level.