NEW YORK (TheStreet) -- Shares of SeaWorld Entertainment Inc (SEAS) are higher by 1.50% to $20.69 in pre-market trading on Thursday, following a ratings upgrade to "outperform" from "neutral" at Macquarie Group (MQBKY) this morning.
Analysts at the firm said valuation does not reflect 2015 potential and the longer-term turnaround of SeaWorld.
Macquarie set a price target at $26.
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 a few notable 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 generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Although SEAS's debt-to-equity ratio of 2.95 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.34, which clearly demonstrates the inability to cover short-term cash needs.
- SEAS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.95%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.6%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- SEAWORLD ENTERTAINMENT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEAWORLD ENTERTAINMENT INC reported lower earnings of $0.57 versus $0.83 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.57).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, SEAWORLD ENTERTAINMENT INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: SEAS Ratings Report
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