Six Flags Entertainment Corp (SIX), Cedar Fair, L.P. (FUN), SeaWorld Entertainment Inc (SEAS): Don’t Jump on This Just Yet

That said, SeaWorld’s other competitor, Cedar Fair, L.P. (NYSE:FUN) has a balance sheet that is in the same state as SeaWorld’s. With a debt to equity level of 9.6x and a current ratio of one, the company is lacking room for any financial shocks or a fall in income. Still, the company’s valuation is nowhere as near as inflated as that of SeaWorld Entertainment Inc (NYSE:SEAS) – although the company is trading at a P/B ratio of 14.6, but I assume that the company’s high level of debt is mitigating the majority of its assets.

So overall

Overall, SeaWorld Entertainment Inc (NYSE:SEAS)’s hotly anticipated IPO may not be all that it’s stacked up to be. With high levels of debt, a low level of interest cover, and serious lack of short-term financial liquidity, the company looks to be financially unsound, even in comparison to its closest peers in the sector.

With a ttm P/E of 36, a P/B ratio of 5.5, and around 50% of the company’s net income being spent on interest payments, SeaWorld Entertainment Inc (NYSE:SEAS)’s investors should be wary as a slight fall in park attendance or correction in the market could quickly send the company’s share price lower.

The article Don’t Jump on the SeaWorld Ride Just Yet originally appeared on Fool.com and is written by Rupert Hargreaves.

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