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Why SeaWorld (SEAS) Stock Is Plummeting Today

Zacks Research Staff

SeaWorld Entertainment, Inc. (SEAS) is taking a beating after reported earnings fell under analyst expectations.  SeaWorld reported earnings of $0.43 per share, less than the Zacks Consensus Estimate of $0.60 per share. In comparison to 2Q last year, revenue is down about 1% from $411.3 million to $405.2 million. On the other hand, net income increased about 355% since 2Q last year, but investors should keep in mind that last year’s 2Q showed a net loss.

Attendance increased 0.3% at 6.6 million versus the second quarter of 2013. Year to date, attendance at SeaWorld parks is down 4.3%. 

"We were pleased to report attendance growth in the quarter despite a challenging industry and competitive environment and a tough comparison to the prior year quarter," SeaWorld CEO Jim Atchison said.

Thanks to this lackluster report, SeaWorld Entertainment, Inc. (SEAS) is currently trading at about $18.60 per share, down about 34% for the day.  The sharp move lower comes on incredible volume which is already 25 times normal just halfway through the trading session.

In terms of positives from the report, SEAS did announce a shareholder-friendly stock repurchase. The Company’s Board of Directors authorized a $250 million share repurchase program effective January 1, 2015, though this did little to soften the blow for SEAS in Wednesday trading.

CEO Jim Atchison said, ““The Board’s authorization of a share repurchase program reflects our confidence in the health and long-term outlook of the Company.”

Mr. Atchison also added, ““With a strong balance sheet and cash flows, we believe we can take advantage of volatile market conditions to buy back our shares while maintaining the flexibility to make strategic investments in our future.”

SEAS currently has a Zacks Rank #4 (Sell), suggesting that the earnings estimate picture wasn’t looking too good even before this report. And given the weakness in the shares today as well as concerns about future growth opportunities, this could be a stock to avoid in the near term, especially if it keeps its ‘sell’ Rank.

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