Shares of Six Flags Entertainment Corporation FUN have rallied 25.8% in the past three months compared with the Zacks Leisure and Recreation Services industry’s 10% growth. Over the same timeframe, the stock has outperformed the S&P 500’s growth of 5.1%.
The company’s performance has been fueled by strong attendance across its combined portfolio, supporting the belief that its consumer base remains healthy and demand for its products remains robust. The momentum in demand across both legacy Cedar Fair and legacy Six Flags parks has led to a meaningful increase in the sales of season passes and memberships. These positive trends underscore guests' willingness to spend during their visits and highlight the park teams' ability to deliver compelling products and high-quality guest service.
3 Months FUN Stock Price Performance
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Technical indicators suggest a continued strong performance for FUN. The stock is trading above its 50-day moving average, signaling robust upward momentum and price stability.
FUN Stock Trades Above 50-Day Moving Average
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Six Flags Entertainment is still trading 16.5% below its 52-week high of $58.70. So, should investors pour more capital into FUN now? Let us take a closer look.
Key Drivers of Six Flags Entertainment’s Growth
Growth in Season Pass and Membership Sales: The company’s season pass and membership sales have witnessed robust growth, signaling strong customer loyalty. Early sales for 2025 are up 8% year over year, with pricing reflecting a 3% increase. The uptick in advance sales ensures a steady stream of recurring revenues, offering a cushion against potential short-term fluctuations in attendance.
Expansion of Seasonal and Themed Events: FUN’s 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.
The events will not only enhance customer engagement but also pave a path for improvement in performance indicators, including longer length of stay, greater pricing power, higher levels of guest spending and ultimately, improved margins and higher free cash flow.
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. Investments in technology, such as mobile ordering and virtual queues, further streamline operations and enhance the overall guest experience.
Merger Synergies With Cedar Fair: The recent merger between Six Flags and Cedar Fair is a significant growth catalyst. The integration 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 — sharing space with Vail Resorts, Inc. MTN, Lucky Strike Entertainment Corporation LUCK and Camping World Holdings, Inc. CWH — is trading at a discount. FUN is currently trading at 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.
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FUN Challenges to Watch: Costs & Economic Pressures
Six Flags Entertainment has been witnessing inflated costs and expenses for some time now, which have been hurting its bottom line and margins to some extent. One of the primary reasons for the increase in the company’s cost and expense structure is attributable to the $21.3 million of costs associated with the merger between former Six Flags Entertainment and Cedar Fair, L.P.
In the first nine months of 2024, the company’s operating costs and expenses increased 35.2% year over year due to a $259.9 million increase in operating expenses, a $181.1 million increase in selling, general and administrative ("SG&A") expenses and a $45.7 million increase in cost of goods sold.
The leisure industry is highly sensitive to economic conditions, and with inflationary pressures still looming, discretionary spending is likely to come under pressure. While Six Flags Entertainment has reported strong attendance in recent quarters, sustained economic headwinds could reduce consumer willingness to spend on park tickets, food and merchandise. Given the company’s reliance on per-capita spending growth, a downturn in consumer sentiment could hit Six Flags’ revenue.
FUN’s 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. The downward revision in earnings estimates indicates analysts’ declining confidence in the stock.
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FUN 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. The recent merger with Cedar Fair unlocks significant benefits and expands its geographic footprint, further enhancing its competitive advantage. Investments in park enhancements and technology also lay the groundwork for sustained guest satisfaction and operational efficiency.
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 the 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.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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