SeaWorld Entertainment Inc is a publicly traded company that operates as a family oriented theme park. While establishing 11 marine-life theme parks, SeaWorld has created a well known brand name throughout the United States. As we take a look and examine this company, we will analyze the stock market and calculate certain ratios to see how well or poorly SeaWorld has been doing the past years while also comparing the company with other related industries.
Ideally, we would compare SeaWorld to other zoological establishments or aquariums but they are mostly nonprofit or not publicly traded so we can not compare. However, Yahoo Finance says they are comparable to Six Flags, so we used Six Flags.
A lot of the time, a company’s stock price can be driven by the company’s ability to generate earnings. The three ratios used to effectively compare and analyze the company will be profit margin, return on assets, and current ratio. Analyzing a company’s profit margin can be very helpful when determining an efficient and profitable company. SeaWorld Entertainment Inc has a profit margin of 3.58%, and Six Flags has a profit margin of 12.24%. Since profit margin measures the amount of net income earned with each dollar of sales, it can be determined that Six Flags is generating a relatively higher profit margin than SeaWorld. Which means Six Flags is generating more net income off of each dollar of sale than SeaWorld. Also comparing the two companies return on assets, again, Six Flags has a higher return on assets than SeaWorld. This comparison could indicate many different things. SeaWorld currently has a return on assets ratio of 4.33% and Six Flags has a ratio of 9.18%. These two ratios may indicate how profitable a company is relative to its total assets. With Six Flags having a 9.18% ratio and SeaWorld having a 4.33%, it is reasonable to say that Six Flags can convert its investment in assets into profits more efficiently than Sea World can. So there is probably more of a return on investment with Six Flags. It also shows that Six Flags is more effectively managing assets to generate a larger amount of net income. The last ratio to analyze is the current ratio. SeaWorld has a current ratio of .48 while Six Flags has ratio of .84. With current ratio measuring a firm’s ability to pay off its short-term liabilities with its current assets, it primarily focuses on the liquidity of a company. Usually, current ratios help investors understand the liquidity of a company and how easily the company can pay off its current liabilities. Since a higher current ratio is more favorable than a lower ratio, it can be concluded that Six Flags is more favorable than SeaWorld and can more easily make current debt payments. So this means six flags can pay off 84 percent of their current liabilities, where SeaWorld can only pay off 48 percent of their liabilities. While analyzing and comparing these three ratios, it is more than likely that SeaWorld is doing worse than Six Flags. By comparing both companies and analyzing the three ratios, it can be assumed that SeaWorld has a much worse profitability ratio as well as the return on assets ratio and current ratio than Six Flags. Although SeaWorld was generating a much larger profit years ago, they can not seem to get back on track. A lot of factors may tie into this though. Even though the attendance for SeaWorld has risen in the last year or two, it suffered a 1% decline in revenue per capita mainly due to the discounting to lure customers in, according to the article on Investopedia, “SeaWorld Free Willy, end Orca Shows.” A reason why they …show more content…
This low amount of risk is a good and bad thing. Low risk results in low reward or return, however you are less likely to lose your initial investment in the stock. As the market shifts, so does SeaWorld’s stock but it will not shift as much as the market. For example, if the market increases by 10% SeaWorld will only increase by 2.25%. This also applies if the market decreases, SeaWorld stock will also decrease but not as much as the market. Proving, the stock is less risky than the
Ideally, we would compare SeaWorld to other zoological establishments or aquariums but they are mostly nonprofit or not publicly traded so we can not compare. However, Yahoo Finance says they are comparable to Six Flags, so we used Six Flags.
A lot of the time, a company’s stock price can be driven by the company’s ability to generate earnings. The three ratios used to effectively compare and analyze the company will be profit margin, return on assets, and current ratio. Analyzing a company’s profit margin can be very helpful when determining an efficient and profitable company. SeaWorld Entertainment Inc has a profit margin of 3.58%, and Six Flags has a profit margin of 12.24%. Since profit margin measures the amount of net income earned with each dollar of sales, it can be determined that Six Flags is generating a relatively higher profit margin than SeaWorld. Which means Six Flags is generating more net income off of each dollar of sale than SeaWorld. Also comparing the two companies return on assets, again, Six Flags has a higher return on assets than SeaWorld. This comparison could indicate many different things. SeaWorld currently has a return on assets ratio of 4.33% and Six Flags has a ratio of 9.18%. These two ratios may indicate how profitable a company is relative to its total assets. With Six Flags having a 9.18% ratio and SeaWorld having a 4.33%, it is reasonable to say that Six Flags can convert its investment in assets into profits more efficiently than Sea World can. So there is probably more of a return on investment with Six Flags. It also shows that Six Flags is more effectively managing assets to generate a larger amount of net income. The last ratio to analyze is the current ratio. SeaWorld has a current ratio of .48 while Six Flags has ratio of .84. With current ratio measuring a firm’s ability to pay off its short-term liabilities with its current assets, it primarily focuses on the liquidity of a company. Usually, current ratios help investors understand the liquidity of a company and how easily the company can pay off its current liabilities. Since a higher current ratio is more favorable than a lower ratio, it can be concluded that Six Flags is more favorable than SeaWorld and can more easily make current debt payments. So this means six flags can pay off 84 percent of their current liabilities, where SeaWorld can only pay off 48 percent of their liabilities. While analyzing and comparing these three ratios, it is more than likely that SeaWorld is doing worse than Six Flags. By comparing both companies and analyzing the three ratios, it can be assumed that SeaWorld has a much worse profitability ratio as well as the return on assets ratio and current ratio than Six Flags. Although SeaWorld was generating a much larger profit years ago, they can not seem to get back on track. A lot of factors may tie into this though. Even though the attendance for SeaWorld has risen in the last year or two, it suffered a 1% decline in revenue per capita mainly due to the discounting to lure customers in, according to the article on Investopedia, “SeaWorld Free Willy, end Orca Shows.” A reason why they …show more content…
This low amount of risk is a good and bad thing. Low risk results in low reward or return, however you are less likely to lose your initial investment in the stock. As the market shifts, so does SeaWorld’s stock but it will not shift as much as the market. For example, if the market increases by 10% SeaWorld will only increase by 2.25%. This also applies if the market decreases, SeaWorld stock will also decrease but not as much as the market. Proving, the stock is less risky than the