Amusement park operator Six Flags (NYSE: SIX) stock has been trounced down (-49%) on the year. Business was severely impacted from the pandemic as an epicenter industry that experienced long periods of shutdowns. The reopening and elimination of social distancing mandates have enabled the Company to accelerate its recovery as revenues climb with rebounding attendance. The Company is expanding its margins as revenues climbed 68% in the fiscal first quarter of 2022. The world’s largest regional theme park and largest operator of water parks in North America has been undergoing a transformation. It has been upgrading its operations, appearances, wi-fi and dining options while reorienting its workforce culture to be more customer-centric. Six Flags has 27 regional theme parks worldwide averaging 200 acres per location. The Company have over 900 rides and 400 rollercoasters and makes up the majority of revenues from theme park admissions and the rest in food and merchandise sales. The Company is in rebound mode led by a new CEO that is determined to bolster guest experiences and satisfaction as top priority. Prudent investors looking for exposure ahead of the recovery in amusement park attendance can look for opportunistic pullbacks in shares of Six Flags Entertainment.
Q1 Fiscal 2022 Earnings Release
On May 12, 2022, Six Flags released its fiscal first-quarter 2022 results for the quarter ending March 2022. The Company reported an adjusted earnings-per-share (EPS) loss of ($0.76) excluding non-recurring items versus consensus analyst estimates for a loss of (-$1.06), beating estimates by $0.30. Revenues rose 68.4% year-over-year (YOY) to $138.1 million, beating analyst estimates for $122.26 million. Most of the parks were not expected to open in the first quarter. Six Flags CEO Selim Bassoul commented, “Six Flags has been quickly executing to improve the guest experience, improving ride throughput by increasing ride uptime and implementing single rider lanes on busy days; improving staffing and training of our team members; upgrading our park appearance, including our front gates, restrooms, and restaurants; providing better food quality; and offering more guest amenities such as benches, shade structures, and children’s areas. We have reoriented our culture to prioritize the guest in everything we do, and we fundamentally believe this will drive significant and sustainable long-term earnings growth.”
Conference Call Takeaways
CEO Bassoul provided color on the continued improvements they are making with its theme parks. They are focused on top priority of improving guest experiences and guest satisfaction. The top metric is improving ride efficiency and convenience by increasing the rides per guest per day. For example, he discovered in his first 100 days that 30% of the seats are empty every time a ride leaves the station as groups don’t want to be split up. To solve this problem, he has implemented single rider lanes on its busiest days to allow guests willing to split up to ride solo, which moves the line quicker and fills empty seats. He also implemented skip the line passes and boosted staffing with enhanced training. They have been updating the front gates for a good first impression and renovating and modernizing its restaurants. Food quality has improved with the recruitment of a new executive chef and reimagining its menus. They have improved their top selling menu items like burgers, pizzas and chicken tends while adding healthy options like rotisserie chicken and Asian crunch salads. Six Flags has been adding extra benches and shading, more seating capacity in the dining areas and upgrading its wi-fi coverage in the parks. Six Flags is also improving the digital experience with interactive digital maps and upgrades to the mobile app. He concluded, “Finally, we have refocused our culture to prioritize the guests in everything we do. And we fundamentally believe that by focusing all of our efforts on continuously improving the guest experience, we will drive significant and sustainable earnings growth over time.”
SIX Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for SIX stock. The weekly rifle chart downtrend has a falling 5-period moving average (MA) resistance at $27.30 followed by the 15-period MA at $35.23. The weekly lower Bollinger Bands (BBs) sit near the the $19.81 Fibonacci (fib) level. The weekly stochastic oscillation collapsed through the 20-band to test a mini inverse pup attempt at the 10-band. The weekly market structure low (MSL) buy triggered on the breakout through $17.49. The daily rifle chart has a downtrend with a falling 5-period MA at $22.37 followed by the 15-period MA at $26.90 with daily lower BBs at $19.37. The daily stochastic fell through the 20-band to stall at the 10-band for a mini inverse pup or a cross back up. The daily 50-period MA sits at $32.71 and daily 200-period MA sits at $39.61. Prudent investors can watch for opportunistic pullback levels at the $19.81 fib, $17.49 daily MSL trigger, $15.28 fib, $13.49 fib, and the $11.27 fib level. Upside trajectories range from the $28.36 fib level up towards the $38.79 fib level.