NEW YORK (TheStreet) --Shares of SeaWorld Entertainment Inc. (SEAS) are higher by 4.04% to $16.74 in pre-market trading on Friday, as the stock gains following yesterday's announcement the company's CEO, Jim Atchison, will be stepping down.
Atchison will be replaced by vice chairman of the board David D'Alessandro, who will act as interim CEO, effective January 15, 2015, until a permanent successor is found.
SeaWorld, an animals for entertainment and theme park company, said Atchison will act as a consultant for the company, and that it will nominate him to serve as chairman of the board for the not-for-profit, independent SeaWorld and Busch Gardens Conservation Fund.
For over a year Atchison and SeaWorld have been dealing with negative publicity, and a growing change in public opinion regarding keeping marine mammals in captivity. This change was the result of a 2013 documentary called Blackfish, which accuses SeaWorld of mistreating its animals, and placing its workers in dangerous situations.
Blackfish investigates the circumstances that led to the 2010 death of a veteran SeaWorld Orlando trainer, who was killed by one of the company's star attractions, Tilikum, a 12,000 pound bull orca.
Additionally, SeaWorld also announced a restructuring program across its entire 11-park enterprise. The company says "this effort will centralize some operations, reduce duplication of functions and increase efficiencies and accelerate execution."
SeaWorld added that as part of this restructuring plan it will need to cut jobs, but was not specific as to which positions would be lost.
"In order to achieve the goals of our business realignment, we regret that some positions will necessarily be eliminated. However, our cost savings effort is part of a broader program to position us for long term growth," Atchison said.
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 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 unimpressive growth in net income, generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 27.8% when compared to the same quarter one year ago, falling from $120.74 million to $87.18 million.
- Although SEAS's debt-to-equity ratio of 2.59 is very high, it is currently less than that of the industry average. To add to this, SEAS has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Net operating cash flow has decreased to $136.43 million or 23.60% 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.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.42%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 25.37% compared to the year-earlier 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.
- SEAWORLD ENTERTAINMENT INC's earnings per share declined by 25.4% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SEAWORLD ENTERTAINMENT INC reported lower earnings of $0.58 versus $0.83 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus $0.58).
- You can view the full analysis from the report here: SEAS Ratings Report