We now have the quarterly updates for all five of the country’s leading theme park and regional amusement park operators, and it’s safe to say the first three months of 2018 blew out the same three-month period of 2017. Six Flags (NYSE: SIX), Cedar Fair (NYSE: FUN), and SeaWorld Entertainment (NYSE: SEAS) joined the theme park segments of Disney (NYSE: DIS) and Comcast (NASDAQ: CMCSA) in posting double-digit revenue growth in the latest quarter.
- Disney: Up 13.5% to $4.9 billion
- Comcast’s Universal Studios: Up 14.5% to $1.3 billion
- SeaWorld Entertainment: Up 16.5% to $217.2 million
- Six Flags: Up 29.6% to $129 million
- Cedar Fair: Up 13.3% to $54.7 million
All five chains posting top-line growth of 13% or better is pretty special, but investors shouldn’t be lulled into thinking that this is the norm. The timing of the Easter holiday and other one-off factors fueled the stellar showing through the first three months of this year, and the tailwinds of the last quarter will be headwinds in the current period.
You must be this tall to ride
There’s naturally more than a little seasonal lumpiness to this industry. Most of the turnstile clicks will materialize during the second and third calendar quarters when schools let out for summer breaks. It’s also when the Memorial Day and Labor Day holiday weekends take place. The first quarter will always be a crummy barometer.
However, the main reason that all five of the publicly traded major players in the thrill trade had big revenue spikes is that the Easter holiday occurred in March this year. The religious holiday took place in April of last year, and many schools schedule their weeklong spring breaks to coincide with Easter. This naturally suggests that the incremental gains this time around will be somewhat reversed in the second quarter, but the impact won’t be as pronounced since the overall revenue generated during the current quarter is so much larger than the tally through January, February, and March.
There were other factors boosting performance. Six Flags Magic Mountain shifted to opening every day this year, and the amusement park chain also opened a new waterpark in Mexico. Comcast’s Universal Orlando didn’t have the Volcano Bay waterpark open a year ago. Disney World’s attendance-boosting Pandora — The World of Avatar expansion didn’t open until late May of last year. These factors that helped prop up the latest financial results will also provide a small boost in the current period.
The second quarter shouldn’t be awful. Analysts see revenue at Cedar Fair and Six Flags rising 3.6% and 3.9%, respectively. Wall Street sees SeaWorld checking in with a decline of 0.5%, but those same pros also dramatically underestimated what the marine-life park operator would ring up last time out. Media conglomerates Disney and Comcast don’t offer up guidance for their individual segments.
There are still plenty of reasons to be encouraged. Two of this year’s most anticipated new roller coasters — Steel Vengeance at Cedar Point and Wonder Woman’s Golden Lasso single-rail coaster — opened earlier this month. The economy’s holding up nicely, and as long as gas prices hold steady, there should be a lot of summer travelers hitting up the major attractions.
Investors will need to be realistic. None of the five operators is likely to repeat the feat of double-digit revenue growth for the current quarter. However, it doesn’t make this any less compelling a ride for investors cashing in on a booming niche in the leisure industry.
