
Will SeaWorld (SEAS) Stock Be Impacted by Plan to Fight Orca Ban?
NEW YORK (TheStreet) -- SeaWorld Entertainment (SEAS) - Get Report announced on Thursday evening that it plans to fight back against the California Coastal Commission's decision to approve its $100 million killer whale tank expansion project, with the amendment that the San Diego park halt all breeding of the animals.
"As a regulatory board charged with managing coastal development and related land-use decisions, the Coastal Commission went way beyond its jurisdiction and authority when it banned breeding by killer whales at SeaWorld," company CEO Joel Manby said in a statement.
The Commission's ruling also prohibits the sale, trade or transfer of captive killer whales in California, however, Manby believes the Commission "has overstepped both federal and California law."
The question behind the ethics of keeping killer whales, or orcas, the ocean's top predator, in captivity reached the public eye in 2010 when a whale at the company's Orlando park dragged a senior trainer into his tank and killed her. The 2013 documentary Blackfish, which shed an unflattering light on SeaWorld and its orca program, brought the issue into the mainstream.
SeaWorld announced last summer that it will expand the habitats of its star attractions at its three main parks in California, Florida and Texas. The ruling by the California Commission will not impact the company's other parks.
Separately, TheStreet Ratings team rates SEAWORLD ENTERTAINMENT INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate SEAWORLD ENTERTAINMENT INC (SEAS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 43.23% is the gross profit margin for SEAWORLD ENTERTAINMENT INC which we consider to be strong. Regardless of SEAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SEAS's net profit margin of 1.48% is significantly lower than the industry average.
- After a year of stock price fluctuations, the net result is that SEAS's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, SEAWORLD ENTERTAINMENT INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has decreased to $104.40 million or 13.35% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SEAWORLD ENTERTAINMENT INC has marginally lower results.
- You can view the full analysis from the report here: SEAS








