A week ago today, Six Flags (NYSE:SIX) released less than appetizing earnings. Shares are down 5% over the last week, with earnings beating estimates, but revenues falling short. After earnings, the stock fell as much as 10% on news that attendance had fallen 8% year over year. The stock has recovered some as the company explained the fall in attendance was due to the harsh winter.
Its price increases from earlier this year actually helped offset the lower attendance, allowing the company to post an increase in admission revenues. Since we profiled Six Flags in June of last year, shares are down 9%. Somewhat of a disappointment. Although the near 5% dividend did help soften the blow.
We're still interested in owning Six Flags, in part, due to the healthy dividend -- yielding 4.8%. But also because it should be one of the key benefactors of higher employment and consumer spending. In our initial coverage, we noted the benefits of the business, saying:
"Thanks to the high-barriers to entry the company has an impressive moat that protects its business and margins. This include the $300 million to $500 million it takes to open a theme park, not to mention the two-plus years to actually build a theme park. Other barriers include the limited supply of real estate and zoning restrictions. The company estimates that replacement costs of its portfolio is around $5 billion to $6 billion."
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