Six Flags Entertainment: Zacks’ Bear of the Day Play

Six Flags Magic Mountain is easily one of the top theme parks in the nation. Owned and operated by Six Flags Entertainment ( (SIXFree Report) , the park is arguably the company’s finest property and has some of the best roller coasters in the nation.

But just because a company’s product is great, it doesn’t mean that the underlying stock in the company makes for a top notch investment. This is definitely the case for SIX stock, as these shares might actually be ones to avoid in 2017, no matter what you think about the company’s properties.

Why SIX Could Struggle Based on Fundamentals

The fundamental picture for SIX isn’t great, and that is evident if investors look to the company’s VGM score which comes in at just a ‘D’ grade. This includes a Value Grade of ‘F’ and a Momentum Grade of ‘C’, giving SIX a weak outlook on both of these fronts.

In fact, the value metrics for some of the most followed ratios are especially poor for SIX, including an astronomical forward PE of 43. Add that to a P/S ratio that is more than double the industry average and a PEG approaching 5.5, and you have a great case against Six Flags stock from a value standpoint.

Earnings Too

However, there is more reason to worry about SIX, and that is evident if we look to the earnings estimate picture. Investors haven’t seen any estimates go higher for the stock in the past two months for the current quarter, current year, or next year time frames.

Thanks to this, the consensus estimate has been sliding for Six Flags Entertainment shares, pushing the full year consensus estimate to just $1.38/share in earnings, down from $1.45/share 60 days ago, and $1.87/share 90 days ago.

Obviously, this sliding trend isn’t something that investors want to see, and especially when you combine it with the weak value score. Add in a weak recent history in earnings season—including two straight misses—and it isn’t a great case for SIX stock to start 2017.

SIX FLAGS ENTMT Price, Consensus and EPS Surprise

SIX FLAGS ENTMT Price, Consensus and EPS Surprise | SIX FLAGS ENTMT Quote

 

No wonder shares of SIX have a Zacks Rank #5 (strong sell) and why we are looking for underperformance from the company to begin the New Year.

Other Picks

Fortunately for investors who want to stay in the leisure industry, the space actually does have a top 30% industry rank right now. This means that there are plenty of solid selections, and a host of companies that are better positioned for 2017 when compared to SIX.

One to watch in particular is Marcus Corporation (MCSFree Report) , as this company has a Zacks Rank #1 (Strong Buy) and it is riding a nice streak in terms of earnings beats too. This could be a better ticket for investors in the leisure market in 2017, at least when compared to SIX to start the year.

So Where Are the Profitable Trades?

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