Six Flags Entertainment Corp (SIX): Are You Daring Enough to Invest in This Theme Park?

Cedar Fair, L.P. (NYSE:FUN) owns and operates 16 amusement parks as well as five hotels in the United States. Cedar Fair, L.P. (NYSE:FUN)’s revenue has improved over the past two years, and those years have been profitable.  But Cedar Fair is highly leveraged, and it’s currently trading at 40 times earnings.

Cedar Fair, L.P. (NYSE:FUN) yields 6%, but considering its weak balance sheet and questionable growth rates, it’s possible for the dividend to be cut in the future.  It’s currently carrying $1.5 billion in long term debt and pays out more than $100 million per year in interest expenses.

SeaWorld Entertainment Inc (NYSE:SEAS) owns and operates 10 amusement parks in the United States.  It recently went public, and the company reported losses in its last two quarters. It’s not as highly leveraged as Cedar Fair, but debt is a concern, making it high risk. SeaWorld Entertainment Inc (NYSE:SEAS) is trading around 36 times earnings, and it yields 2.10%.

Shares opened at $27, and on the first day of trading, the stock was up almost 30%.  It used the proceeds from the IPO to pay down some debt and pay off an advisory firm.  Now it’s looking to leverage its brand to develop new revenue streams.

Conclusion

SeaWorld Entertainment Inc (NYSE:SEAS) and Cedar Fair may be too leveraged for your liking, so before you take the plunge be sure to do your own due diligence.  But if you’re looking for a profitable ride, consider Six Flags Entertainment Corp (NYSE:SIX).  Just be aware the stock has sold off lately, so you may be able to get in at a better price.

The article Are You Daring Enough to Invest in This Theme Park? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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