Six Flags Entertainment Corporation (NYSE:SIX) Just Reported And Analysts Have Been Cutting Their Estimates
The analysts might have been a bit too bullish on Six Flags Entertainment Corporation (NYSE:SIX), given that the company fell short of expectations when it released its third-quarter results last week. Unfortunately, Six Flags Entertainment delivered a serious earnings miss. Revenues of US$126m were 11% below expectations, and statutory losses ballooned 36% to US$1.37 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Six Flags Entertainment after the latest results.
See our latest analysis for Six Flags Entertainment
Following the latest results, Six Flags Entertainment's 13 analysts are now forecasting revenues of US$929.0m in 2021. This would be a substantial 83% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 71% to US$1.21. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$997.2m and losses of US$1.01 per share in 2021. So it's pretty clear the analysts have mixed opinions on Six Flags Entertainment after this update; revenues were downgraded and per-share losses expected to increase.
The average price target was broadly unchanged at US$23.36, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Six Flags Entertainment at US$30.00 per share, while the most bearish prices it at US$17.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Six Flags Entertainment is forecast to grow faster in the future than it has in the past, with revenues expected to grow 83%. If achieved, this would be a much better result than the 1.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 22% per year. Not only are Six Flags Entertainment's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Six Flags Entertainment's revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Six Flags Entertainment going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - Six Flags Entertainment has 1 warning sign we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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