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SEC Fines SeaWorld & Ex-CEO for Hiding 'Blackfish' Impact

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Orlando-based marine theme park operator SeaWorld Entertainment, Inc. SEAS and its former chief executive has been slapped $5 million in fines by the Securities and Exchange Commission or SEC for not disclosing the negative impact a documentary film “Blackfish” was having on its business. The documentary focused on how the treatment of orcas led to the death of trainers.

As per the recent SEC filing, an agreement between the company and the SEC has been made to settle the claim. The company will pay a penalty of $4 million and former chief executive officer, James Atchison, will cough up more than $1 million.

The SEC claimed that from December 2013 to August 2014, the company tried to misinform and conceal the Blackfish’s impact on the company’s business. In fact, on Aug 13, 2014, SeaWorld for the first time acknowledged that its declining attendance was due to negative publicity. SeaWorld’s stock price fell as much as 32.9% on the same day, causing losses amounting to $832 million for shareholders.

Notably, the company saw a substantial fall in revenues and attendance in 2017. In the period under review, total revenues fell 6% to $1.26 billion while attendance at the marine theme parks dropped 5.5% to 20.8 million visitors.

As far as financial impact is considered, market experts are of the opinion that this claim will have a nominal effect on the company’s business. Nonetheless, the company saw an improvement in revenues and attendance on the back of new pricing strategies, enhanced communication activities and strong operational execution. In the first half of 2018, total revenues increased 8.7% year over year to $609.1 million and attendance rose 8% to 9.6 million guests.

The company has gained a considerable 151.3% in the past year, outperforming the industry’s rise of 6.7%.

Zacks Rank & Stocks to Consider

SeaWorld carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industry are Callaway Golf Company ELY, carrying a Zacks Rank #1 (Strong Buy), Reading International, Inc. RDI and Vail Resorts, Inc. MTN with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Callaway Golf Company has an expected earnings per share growth rate of 88.7% for the current year.

Reading International has an expected earnings per share growth rate of 48.9% for the next year.

Vail Resorts has an expected earnings per share growth rate of 72.6% for the current year.

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