Six Flags shares fall as downgrades follow weak 2Q earnings

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Posted 12:10PM on Tuesday, August 13, 2002

NEW YORK - Shares of Six Flags Inc. opened down 57 percent Tuesday morning after the Oklahoma City, Okla., company's disappointing second-quarter earnings were followed by ratings downgrades. The stock also hit a new 52-week low. The regional theme park company posted second-quarter operating income late Monday of 8 cents a share, below the Thomson First Call analyst consensus of 16 cents. The company also warned that it didn't believe that it would achieve full-year performance goals. New York Stock Exchange-listed Six Flags shares traded Tuesday morning at $5.25, down $6.61, or 56 percent. The stock earlier traded as low as $4.75, a new 52-week low. The previous 52-week low was $10.34, reached Sept. 21. Six Flags owns and operates more than 30 family-oriented theme and water parks in the United States, Europe and Latin America. On Monday, the company reported revenue in the quarter dropped to $347.8 million from the $356.5 million of the 2001 quarter, as a 9.6 percent increase in per capital spending was offset by an 11 percent drop in attendance at its consolidated parks. On Tuesday, Goldman Sachs downgraded Six Flags to market perform from trading, Prudential Inc. cut the stock to hold from buy and Salomon Smith Barney Inc. lowered its rating to neutral from outperform. Goldman analyst Christopher Cox said he was expecting a 2.7 percent increase in earnings before interest, taxes, depreciation and amortization -- or Ebitda, a cash flow measurement -- but adjusted Ebitda drooped 10.4 percent in the quarter. "Even bearing in mind the tough economic backdrop, we find the magnitude of the shortfall troubling," he said in a research note. Prudential analyst Katherine Styponias said in a research note that she now expects a 2002 loss of 28 cents a share, wider than her previous view of an 8-cent loss. Her price target went to $11 a share from $22.