Rating Change #2
Six Flags Entertainment Corp (SIX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- SIX's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 10.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 106.7% when compared to the same quarter one year prior, rising from $34.96 million to $72.27 million.
- The gross profit margin for SIX FLAGS ENTERTAINMENT CORP is rather high; currently it is at 57.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.30% is above that of the industry average.
- Net operating cash flow has increased to $175.97 million or 37.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.95%.
- Powered by its strong earnings growth of 104.83% and other important driving factors, this stock has surged by 61.68% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
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