SeaWorld (SEAS) Stock Pummeled After Earnings Miss

Shares of SeaWorld Entertainment Inc. (SEAS) were off -0.11 or -0.58 percent to $18.79 per share in this morning's premarket, after the company announced lower than expected earnings for its second quarter of 2014 yesterday. The stock fell sharply after the announcement losing almost a third of its value. Seaworld Entertainment stock closed down -9.25 or -32.86 percent to close at $18.90 per share in Wednesday's regular trading session.

Orlando, Florida based SeaWorld Entertainment Inc. was originally called Busch Entertainment and was a subsidiary of Anheuser Busch (BUD) founded in 1959.
The company runs and operates eleven theme parks throughout the United States and is mostly owned by the Blackstone Group (BX). Blackstone acquired the division from Anheuser Busch in 2009 and subsequently had an initial public offering for the company in 2013.

SeaWorld reported a second quarter profit of +$37.3 million, or $0.43 per share versus a loss of -$15.9 million or -$0.18 per share in the same period one year ago. Revenue declined -1.5 percent to $405 million versus $411.3 million in 2013's second quarter. The analyst consensus was for the company to report earnings of $0.59 per share on revenue of $445 million.

SeaWorld has been at the center of controversy among animal rights groups that accuse the company of cruelty to the animals such as orcas or killer whales used in the company's theme park shows. The controversy was exasperated by the release of a documentary in 2013 called "Blackfish that exposed Seaworld's treatment of the animals.

Chief Executive Officer and President of SeaWorld Entertainment, Jim Atchison said in the company's press release, "In order to drive growth, we are undertaking a number of initiatives, including a detailed review of our Company-wide cost structure with the goal of driving significant cash cost savings in 2014 and 2015. Our intent is to re-invest these savings into additional new attractions at our destination parks and return capital to shareholders. We will announce more details on one of these ground-breaking investments in the coming days.

The press release also said that, "The company believes attendance in the quarter was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California . Two California members of the U.S. House of Representatives proposed a federal study to examine the impact of keeping large marine animals in captivity. They cited "serious concerns about the psychological and physical harm to orcas in captivity.

In addition to the lower than expected earnings, Seaworld stock was hit earlier this month after Southwest Airlines (LUV) terminated a 26 year marketing relationship with the company after being petitioned by 30,000 people. Southwest cited "shifting priorities due to animal rights group protests, however the airline stated that it was "strictly a business decision.

Seaworld's guidance was also revised lower, with SeaWorld now expecting full year 2014 revenue and Adjusted EBITDA to be down in the range of 6-7 percent and 14-16 percent, respectively, compared to the prior year. SeaWorld stock has lost considerably since the release of the Blackfish documentary, and is currently trading at nearly half of its yearly high of $35.40. It could take some time for the stock to recover.

Other News About SeaWorld Entertainment
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Company may soon be forced to cut ticket prices.
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IPOs from private equity companies fare considerably worse than regular IPOs.

Other Stocks in the News
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Published on Aug 14, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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