SeaWorld Entertainment: Zacks’ Bear of the Day Play

It has been a pretty solid time to be in the consumer discretionary market thanks to lower oil prices and strong confidence readings. This has helped companies ranging from restaurants to theme parks, but unfortunately for SeaWorld Entertainment (SEASSnapshot Report) other factors are keeping their stock underwater.

In fact, shares of SEAS have lost over 15% in the past three months, while they are down nearly 40% in the past two years as well. Both of these returns represent huge levels of underperformance when compared to the overall market, and while some might think this means that now is the time to jump in, there could actually be more pain ahead for SEAS in the near term, and especially if look to recent earnings for a guide.

Recent SEAS Earnings

In the most recent earnings report, SEAS was very far off from the consensus posting EPS of just 22 cents a share compared to an estimate of 40 cents a share. This is actually the third such miss out of four reports for SEAS so definitely not a good trend.

Plus, attendance declined 1.6% overall, though at least the average spend remained at a stable level for SeaWorld customers. However, this continued decline really speaks to the ongoing backlash from the ‘Blackfish’ documentary and its impact on SEAS’ business. That documentary detailed the issues of whales’ treatment in captivity and it has definitely hit the public’s perception of SeaWorld hard, leading to the continued decline in theme park attendance.

Earnings Estimates

Analysts also have little hope for a turnaround in SEAS EPS this year as many have been reducing their earnings estimates for the stock. Not a single estimate has gone higher for the current year or next year time frames on SEAS stock in the past 30 days, suggesting universal agreement about SeaWorld’s weak long term prospects.

The magnitude of these revisions has also been impressive as the current year estimate has fallen from $0.83/share to $0.77/share in the past month, while the next year figures have gone from $0.97/share to $0.90/share as well.

With these kind of figures, it shouldn’t be surprising to note that SEAS has earned itself a Zacks Rank #5 (Strong Sell) and that we are looking for more underperformance ahead. The company is actually ranked in the bottom 5% of all securities we cover, so it will be hard to find more than a handful of companies that are worse positioned right now in the consumer space.

Other Choices

If you are looking for better picks in the consumer space, there are obviously a lot of other choices out there. One that appears especially intriguing right now is Marcus Corp (MCS) which is a Zacks Rank #1 (Strong Buy) stock.

This security has done much better in earnings season over the past four quarters including a nearly 44% average, while it is seeing earnings estimates move higher too. So if you want to stay in the consumer space, make sure to give MCS a closer look instead of the still-in-trouble SEAS.

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