Is SeaWorld Entertainment Inc (SEAS) Worth a Look?

On April 19, theme park SeaWorld Entertainment Inc (NYSE:SEAS) made its initial public offering (IPO). Subsequently, its stock price soared like a rocket, increasing 24% on its first day of trading. As an investor, it’s important to look at owning stocks from a business ownership perspective and not as a line item on a stock brokerage statement. With that said you should ask, what does the future hold for SeaWorld and its shareholders? Looking at SeaWorld from the vantage point of strengths, weaknesses, opportunities, and threats should help you answer that question.

Strengths

Brands and experiences: SeaWorld Entertainment Inc (NYSE:SEAS) owns great names such as Adventure Island, SeaWorld, Aquatica, and Discovery Cove. It also licenses well-known names such as Sesame Street and Busch Gardens.

In addition, you may recall some aesthetic qualities surrounding some of the theme parks. According to its prospectus, SeaWorld’s theme parks won awards for park beauty and layout. SeaWorld also provides interactive experiences with animals throughout its parks.

Experienced CEO: As a shareholder or prospective shareholder you would want an experienced management team with intimate knowledge of the business. SeaWorld Entertainment Inc (NYSE:SEAS)’s CEO James D. Atchison started out as a parking lot attendant nearly 30 years ago and worked his way up to his current position of Chief Executive Officer, according to a New York Times article. This represents 30 years of inside knowledge, experience and relationships that will serve shareholders well.

Weaknesses

Lack of diversity: While SeaWorld provides diversity in the form of different theme parks, it lacks the multiple channels and the resources of The Walt Disney Company (NYSE:DIS) or Comcast Corporation (NASDAQ:CMCSA).

The Walt Disney Company (NYSE:DIS), through its Marvel, Pixar and Lucasfilm subsidiaries, owns a vast universe of fictional characters which it can turn into movies, televisions shows, comic books, theme park rides and theme cruise ships. Its creative staff can also create new characters providing more potential for brand building.

Comcast Corporation (NASDAQ:CMCSA) also owns and licenses a number of iconic brands and characters for use in its Universal theme park division, giving it some diversity as well.

Cash: SeaWorld Entertainment Inc (NYSE:SEAS) only possesses $46 million on its balance sheet, representing a mere 10% of its stockholder’s equity. This resulted from a more than $600 million dividend payment to its controlling shareholder The Blackstone Group L.P. (NYSE:BX) over the past couple of years. This could prove problematic in paying SeaWorld’s massive interest payment, which is highlighted in threats, as well as other extra expenses.

Opportunities

Media: In 2013, SeaWorld intends to introduce a new character called Puck the Penguin upon which SeaWorld will feature a theme park, merchandise, and games. It also launched a Saturday morning cartoon called Sea Rescue airing on ABC in 2012.

International expansion: SeaWorld Entertainment Inc (NYSE:SEAS)’s CEO James Atchison wants to bring the company’s brands to markets outside the U.S.

Threats