NEW YORK (TheStreet) -- Cedar Fair (FUN) shares are gaining 0.19% to $58.14 in early morning trading on Friday after Wedbush analysts initiated coverage with an "outperform" rating and price target of $69.
Wedbush analysts believe that investors are under-appreciating the size and reliability of the stock's distribution payout, as well as the growth potential of the distribution in the coming years, according to the report.
"Through a combination of distribution yield, distribution growth, and expanding valuation, we believe that FUN units represent a compelling total return story," the analysts said.
In the long term however, analysts said they expect the EBITDA growth to slow down due to incremental investments and leveraging of the top line towards margin expansion.
Headquartered in Sandusky, Ohio, Cedar Fair is the parent company of Knott's Berry Farm, Cedar Point and Canada's Wonderland. Recently, the company's president and CEO Matt Ouimet announced plans to install interactive dark rides at all 11 locations in the amusement park chain, under the banner of Amusement Dark, according to the Los Angeles Times.
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 some important positives, 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, increase in stock price during the past year and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 15.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- CEDAR FAIR -LP reported flat earnings per share in the most recent quarter. 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 reported lower earnings of $1.86 versus $1.94 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $1.86).
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income has decreased by 0.3% when compared to the same quarter one year ago, dropping from -$83.54 million to -$83.83 million.
- You can view the full analysis from the report here: FUN Ratings Report