Will SeaWorld Entertainment (SEAS) Stock be Helped by Launch of New Ad Campaigns?

SeaWorld Entertainment (SEAS) launched a new ad campaign today designed to fix its damaged reputation.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- On Monday SeaWorld Entertainment Inc. (SEAS) - Get Report launched new ad campaigns designed to buff out the dent in its reputation and combat what it calls "misinformation" regarding the health and wellness of the animals in its care.

Shares of SeaWorld closed slightly higher by 0.55% to $20.21 today, and are now lower by 0.04% to $20.20 in after-hours trading on Monday.

The new ad campaign is designed to highlight "the company's leadership in the care of killer whales and contributions to protect whales both in human care and in the wild. The campaign will emphasize SeaWorld's 50-year commitment to continuous evolution - including its recent announcement of new killer whale habitats - while setting the record straight on false accusations by activists who oppose whales and other animals in zoological settings," SeaWorld said in a statement.

The animals for entertainment theme park company has come under intense criticism relating to allegations the animals in its care are mistreated, especially SeaWorld's signature attraction: performing killer whales, and that it knowingly places its employees in life threatening situations.

"There's been a lot of misinformation and even lies spread about SeaWorld, and we recognize that it has caused some people to have questions about the welfare of killer whales in human care. This long-term campaign will address those questions head on. We want to provide the facts, so people can make up their own minds on this important issue," David D'Alessandro, SeaWorld's Interim CEO said in a statement.

The campaign will begin with print and then later TV ads showcasing SeaWorld veterinarians, researchers, and other members of the company's animal care team at work.

"They will explain how the company cares for its killer whales, while also refuting the claims of animal rights activists. The ads will also highlight SeaWorld's latest initiatives to better understand, care for and protect killer whales now and in the future, including the company's commitment of $10 million in matching funds to study endangered killer whales in the wild," the company added.

SeaWorld's revenue and attendance have been falling since the allegations that captivity causes violent behavior in the ocean's top predator became main stream as a result of a 2013 documentary.

In the last year the company's stock has fallen more than 40%, UTSandiago.com reports.

In its latest earnings report SeaWorld said 1 million fewer people visited its collection of 11 parks.

Recently the company announced the appointment of a new CEO, Joel Manby, who will take over effective April 7.

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, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 96.2% when compared to the same quarter one year ago, falling from -$12.97 million to -$25.45 million.
  • The debt-to-equity ratio is very high at 2.77 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 0.37, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for SEAWORLD ENTERTAINMENT INC is currently lower than what is desirable, coming in at 28.15%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.61% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$8.41 million or 162.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 107.14% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • You can view the full analysis from the report here: SEAS Ratings Report
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