NEW YORK (TheStreet) -- Cedar Fair (FUN) shares are up 1% to $47.29 in early market trading on Tuesday after the amusement park operator had coverage initiated with an "outperform" rating by analysts at Credit Suisse before the opening bell today.
The firm also set a price target of $53 on the stock which represents a potential upside of 12%.
The firm believes in the MLP structure of the Sandusky, OH-based company's portfolio of 11 amusement parks and four water parks while it also anticipates more opportunities for cash distribution as the U.S. economy continues to recover.
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TheStreet Ratings team rates CEDAR FAIR -LP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CEDAR FAIR -LP (FUN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $259.48 million or 10.70% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -17.83%.
- The gross profit margin for CEDAR FAIR -LP is rather high; currently it is at 62.13%. Regardless of FUN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FUN's net profit margin of 27.19% significantly outperformed against the industry.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, CEDAR FAIR -LP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- CEDAR FAIR -LP's earnings per share declined by 14.9% 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, CEDAR FAIR -LP increased its bottom line by earning $1.94 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($2.16 versus $1.94).
- You can view the full analysis from the report here: FUN Ratings Report