Six Flags Entertainment (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. (click to enlarge)
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.
