Most outdoor entertainment companies suffered heavy losses due to the COVID-19 pandemic-led restrictions. Although the industry made a strong recovery with the reopening of the economy, many entertainment stocks have been hit hard by macroeconomic headwinds lately.
The soaring inflation, a spike in fuel prices, geopolitical concerns, and reduction in consumer spending have impacted the industry's pace of recovery. Companies involved in travel, outdoor entertainment, and leisure like cruise lines, airlines, theaters, and theme parks will likely remain under pressure in the upcoming months.
Despite this backdrop, Wall Street analysts are bullish on Six Flags Entertainment Corporation (SIX), Norwegian Cruise Line Holdings Ltd. (NCLH), and Carnival Corporation & plc (CCL). But considering their weak financials, we do not think these stocks can survive the market’s downtrend. So, they are best avoided now.
Six Flags Entertainment Corporation (SIX)
SIX owns and operates regional themes and waterparks under the Six Flags name. Its parks offer thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets.
In the fiscal first quarter ended April 3, 2022, SIX’s net loss narrowed 31.5% year-over-year to $65.66 million, while its adjusted EBITDA loss narrowed 65.9% year-over-year to $15.61 million. The company’s loss per common share amounted to $0.76, representing a decline of 32.1% year-over-year.
Analysts expect its consensus revenue estimate to decline marginally year-over-year to $316.25 million in the fourth quarter (ending December 2022). SIX has missed the consensus EPS estimates in three of the trailing four quarters.
SIX has declined 47.5% in price over the past year to close the last trading session at $23.04.
The 12-month median price target of $45.20 indicates a 96.2% potential upside from the last closing price of $23.04. The price targets range from a low of $24.00 to a high of $60.00.
However, SIX’s POWR Ratings reflect a bleak outlook. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a D grade for Stability and Sentiment. Out of the 16 stocks in the Entertainment – Sports & Theme Parks industry, it is ranked #6.
Click here to see the POWR ratings of SIX for Growth, Value, Momentum, and Quality.
Norwegian Cruise Line Holdings Ltd. (NCLH)
NCLH is a leading global cruise company that operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. It offers itineraries ranging from three days to 180-days calling on various locations across the globe.
NCLH’s total cruise operating expenses increased 266.1% year-over-year to $735.41 million in the fiscal 2022 first quarter ended March 31, 2022. Its operating loss widened 20.6 % from its year-ago value to $688.76 million. The company’s net loss narrowed to $982.71 million compared to $1.37 billion in the same quarter last year. Its loss per share narrowed 43.5% year-over-year to $2.35.
Street expects NCLH’s loss per share to amount to $0.84 for the second quarter (ended June 2022), representing an increase of 56.6% from the prior-year period. It has missed the consensus EPS estimates in three of the trailing four quarters.
Shares of NCLH have declined 61.6% over the past year to close the last trading session at $11.33.
The 12-month median price target of $19.73 indicates a 74.14% potential upside from the last closing price. The price targets range from a low of $13.00 to a high of $33.00.
NCLH’s POWR Ratings reflect its poor prospects. The company has an overall F rating, equating to a Strong Sell in our proprietary rating system.
NCLH has an F grade for Stability and Sentiment and a D for Value and Quality. It is ranked last in the Travel – Cruises industry.
To see additional POWR Ratings (Growth and Momentum) for NCLH, click here.
Carnival Corporation & plc (CCL)
CCL functions as a leisure travel company. It owns and operates hotels, lodges, glass-domed railcars, and motor coaches and offers port destinations and other services. The company operates in the United States, Canada, Continental Europe, the United Kingdom, Australia, New Zealand, Asia, and internationally.
For its fiscal second quarter ended May 31, 2022, CCL’s operating loss and net loss came in at $1.47 billion and $1.83 billion, compared to losses of $1.62 billion and $2.07 billion, respectively, in the year-ago period. The company’s adjusted loss per share came in at $1.61, down 12% from the prior-year period.
Street expects the consensus loss per share estimate for fiscal 2022 (ending November 2022) to come in at $3.54, representing an increase of 49.8% year-over-year. CCL failed to surpass the consensus EPS estimates in each of the trailing four quarters.
The stock has slumped 66.5% over the past year to close the last trading session at $8.82.
The 12-month median price target of $14.85 indicates a 68.4% potential upside from the last closing price. The price targets range from a low of $7.00 to a high of $29.00.
CCL’s POWR Ratings are consistent with this bleak outlook. It has an overall F rating, equating to a Strong Sell in our proprietary rating system. The stock has an F grade for Stability, Sentiment, and Quality and a D for Value. It is ranked #2 in the same industry.
To see CCL’s POWR Ratings for Growth and Momentum, click here.
SIX shares were unchanged in premarket trading Tuesday. Year-to-date, SIX has declined -45.89%, versus a -19.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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