Six Flags Entertainment Corporation’s stock has outperformed the S&P 500 and its leisure industry peers, with a 25.8% rally over the past three months.
Performance Relative to Industry and Market
Three Months Stock Price Performance
| FUN | S&P 500 | Zacks Leisure and Recreation Services |
| — | — | — |
| 25.8% | 5.1% | 10% |
The strong performance can be attributed to robust attendance at its parks, supporting the notion that its consumer base remains healthy and demand for its products is strong.
Strong Attendance Drives Season Pass and Membership Sales
Key Drivers of Six Flags Entertainment’s Growth
Growth in Season Pass and Membership Sales
- The company has witnessed a significant increase in season pass and membership sales, indicating strong customer loyalty.
- Early sales for 2025 are up 8% year over year, with pricing reflecting a 3% increase.
The uptick in advance sales provides a steady stream of recurring revenues, offering a cushion against potential short-term fluctuations in attendance.
Expansion of Seasonal and Themed Events
- Six Flags’ investment in themed events, such as the Halloween and Holiday in the Park festivals, continues to drive attendance and per-capita spending.
- The company reported a 20% year-over-year increase in attendance during its Halloween season, underscoring its ability to tap into seasonal demand and create memorable guest experiences.
Strategic Investments in Park Enhancements
- To maintain its competitive edge, FUN plans to invest heavily in upgrading its parks and adding new attractions.
- With $500 million to $525 million in annual capital expenditures allocated for 2025 and 2026, the company is focused on improving guest satisfaction and boosting attendance.
Merger Synergies with Cedar Fair
The recent merger between Six Flags and Cedar Fair has created the largest regional theme park operator in North America, boasting an unparalleled portfolio of 27 amusement parks and 15 waterparks.
This merger not only expands the geographic reach of the combined entity but also unlocks cost-saving benefits. The company has identified $50 million in cost savings for 2024, with a long-term target of $120 million by 2025.
Valuation: FUN at a Discount
Six Flags Entertainment is trading at a discount compared to its peers. With a forward 12-month price-to-sales (P/S) multiple of 1.43X, well below the industry average of 2.35X, this discount offers a compelling opportunity for investors looking for growth at a reasonable price.
Challenges to Watch: Costs & Economic Pressures
Six Flags Entertainment has been facing rising operating costs and merger-related expenses. Additionally, the leisure industry’s sensitivity to economic conditions and potential inflationary pressures on consumer spending could impact near-term profitability.
Earnings Estimates Southbound
The Zacks Consensus Estimate for FUN’s 2025 earnings per share has declined from $2.96 to $2.78 in the past 30 days, indicating analysts’ declining confidence in the stock.
Investment Verdict: Hold for Now
Six Flags Entertainment is well-positioned for long-term growth, supported by strong attendance trends, robust sales of season passes and memberships, and the successful execution of seasonal and themed events.
However, challenges such as rising operating costs, merger-related expenses, and potential inflationary pressures on consumer spending could impact near-term profitability. Additionally, the leisure industry’s sensitivity to economic conditions and recent downward revision in earnings estimates signal caution for investors.
While Six Flags Entertainment’s strengths and attractive valuation present a compelling investment case, a careful evaluation of ongoing cost management and consumer demand trends is essential.
For current shareholders, retaining this Zacks Rank #3 (Hold) stock may be a prudent choice, given its long-term growth potential.