Why Did Six Flags Stock Drop Today?

Amusement parkland relation Six Flags Entertainment (NYSE: FUN) banal declined 5.5% done 10:55 a.m. ET Friday -- connected seemingly bully news.

In a enactment covered connected StreetInsider yesterday afternoon, Stifel expert Steven Wieczynski reiterated his "buy" standing and $25 terms people connected Six Flags stock.

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Six Flags announced yesterday it volition merchantability 7 of its amusement parks to EPR Properties (NYSE: EPR) for $331 million.

The properties getting unloaded include:

• Valleyfair (Minneapolis)

• Worlds of Fun (Kansas City)

• Michigan's Adventure (Grand Rapids)

• Schlitterbahn Waterpark Galveston (Galveston)

• Six Flags St. Louis (St. Louis)

• Six Flags Great Escape (Queensbury)

• and Six Flags La Ronde (Montreal).

Combined, they produced $260 cardinal successful gross and $45 cardinal successful adjusted net earlier interest, taxes, depreciation, and amortization (EBITDA) for Six Flags successful 2025. This wealth volition nary longer recur for Six Flags -- and that's OK, says Wieczynski.

"Some mightiness disagree with us," begins the Stifel enactment -- indeed, immoderate intelligibly do disagree, fixed the stock terms decline! Nevertheless, Wieczynski argues this merchantability is bully quality for Six Flags stock.

The parks successful question were "underutilized" and "non-core," says the analyst. They accounted for "only ... 6% of full institution EBITDA," but "needed important capital," and truthful were really a drain connected profits. Selling them off, and reinvesting the currency successful the company's 34 other, much promising parks, could make "significant upside to existent trading levels."

Capex was a immense disbursal for Six Flags past twelvemonth -- $480 cardinal successful total, pushing the institution into antagonistic escaped currency travel for the archetypal clip ever (excluding the Pandemic twelvemonth 2020). Lightening that load could beryllium conscionable the catalyst Six Flags needs to go a amusive banal to ain again.

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