Will SeaWorld (SEAS) Stock be Affected by CEO's Orca Release View?

NEW YORK (TheStreet) -- SeaWorld Entertainment's (SEAS) new CEO Joel Manby said at the company's annual shareholder meeting on Wednesday that releasing the theme park company's performing killer whales (orcas) to open ocean pens would ultimately kill the ocean's top predator, The New York Post reports.

SeaWorld has been facing an onslaught of criticism regarding its practice of keeping killer whales in human care since the 2013 release of the documentary Blackfish, which attributes whale on human aggression to prolonged captivity in small concrete tanks.

Four people have been killed by captive orcas since the early 1990's.

"More than 80% of our whales were born in our care, and sea pens would be a poor choice for them," Manby said at the meeting, The Post noted.

"Uncontrollable exposure to pollution, ocean debris and life-threatening pathogens in ocean waters are just a few of the factors that make sea pens an unhealthy living environment for any of our animals," Manby added.

Manby's statement was in response to a question regarding SeaWorld's scientific ability to place its orcas in sea sanctuaries.

Placing killer whales that were once held in captivity into an open sea sanctuary has been done in the past. Keiko, the much-beloved star of the film "Free Willy" was released into a sea pen, The Post noted. The orca lived for several years in the wild, while also under human observation and care. 

Last summer SeaWorld announced plans to double the size of its killer whale tanks beginning with its facility in San Diego, with Orlando and San Antonio to follow.

Shares of SeaWorld closed at $20.86 on Wednesday afternoon.

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 revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SEAS's revenue growth has slightly outpaced the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 1.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 11.4% when compared to the same quarter one year prior, going from -$49.22 million to -$43.60 million.
  • SEAWORLD ENTERTAINMENT INC has improved earnings per share by 8.9% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, SEAWORLD ENTERTAINMENT INC reported lower earnings of $0.58 versus $0.59 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.58).
  • The gross profit margin for SEAWORLD ENTERTAINMENT INC is rather low; currently it is at 20.91%. Regardless of SEAS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SEAS's net profit margin of -20.31% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio is very high at 3.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.25, which clearly demonstrates the inability to cover short-term cash needs.
  • You can view the full analysis from the report here: SEAS Ratings Report

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