Six Flags Entertainment (NYSE:SIX) stock is trading around $56.75 versus its 52-week range of $35.27-$64.95, up 60% in the past 1-year. The stock trades at a P/E multiple of 18 times, and a forward P/E of 27 times. The stock pays a dividend of 6.4%.
Positive fundamentals for the company:
Six Flags recently increased its quarterly dividend from $0.60 to $0.90, a clear indication that the company is returning cash to investors. Additionally, the company has $82 million remaining from its $250 million buyback program, which was initiated in January 2012. The share buy-back program provides a floor for the stock.
Six Flags continues to generate free cash flow with $231 million reported for Q3-2012. The company is expected to generate free cash flow of $230-$245 million in FY2012, and $250-$260 million in FY2013. The company also has $281 million of cash on its balance sheet.
The sale of Dick Clark Productions in September was a good strategy by management. The company used the proceeds to repurchase 1.1 million shares. The company has an additional $10 million remaining from the sales proceeds, which is held in escrow.
The company has made a significant improvement to leverage, which stands at 2.3 times versus its pre-bankruptcy level of 9.7 times.
Risks associated with investing in Six Flags relate to seasonality, and a decline in the economy, which might impact attendance.
The chart below compares share performance to the S&P 500 over the past year.
Tool provided by Kapitall.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.