One possible factor contributing to the marine mammal entertainment company's stock slump is the recent termination of a 25 year partnership between SeaWorld and Southwest Airlines (LUV - Get Report).
The airline said it terminated its partnership with SeaWorld as a results of "shifting priorities" on the part of both companies, Bloomberg reported.
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However, others would like to believe that Southwest bowed to the pressure from a Change.org petition signed by 30,000 people demanding the airline sever ties with the aquarium. For over a year SeaWorld has been dealing with the backlash from a documentary questioning the ethics of keeping killer whales in captivity, and accusing the company of endangering the safety of its workers by allowing trainers to come in close contact with animals the film describes as "psychologically traumatized." Separately, TheStreet Ratings team rates SEAWORLD ENTERTAINMENT INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation: "We rate SEAWORLD ENTERTAINMENT INC (SEAS) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The share price of SEAWORLD ENTERTAINMENT INC has not done very well: it is down 24.06% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Hotels, Restaurants & Leisure industry. The net income has decreased by 22.5% when compared to the same quarter one year ago, dropping from -$40.36 million to -$49.43 million.
- The debt-to-equity ratio is very high at 2.79 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.32, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, SEAWORLD ENTERTAINMENT INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for SEAWORLD ENTERTAINMENT INC is currently extremely low, coming in at 13.01%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -23.28% is significantly below that of the industry average.
- You can view the full analysis from the report here: SEAS Ratings Report