How will the virus affect attendance of venues in the upcoming years (not just the next few months)? Valuations for companies like Six Flags $SIX looking enticing. Esp. when majority of attendance is in summer months, and there's some viral seasonality.
For $SIX looks like SG&A margins will matter a lot if rev drops. Quick & dirty valuation:
FCF@ Avg pretax margins of 27%: $400M
* 14x multiple
= $5.7B
- $2.1B net debt
- $0.6B noncontrolling interest
= $3B equity value
/ 84.6M shares
= $36 per share vs. $21 now
FCF@ Avg pretax margins of 27%: $400M
* 14x multiple
= $5.7B
- $2.1B net debt
- $0.6B noncontrolling interest
= $3B equity value
/ 84.6M shares
= $36 per share vs. $21 now
If they can hold pretax margins at 32% (2018:34%, 2017:33%), value/share ~= $50.
If 3-5yr margins drop to 24% (12 year avg), value/share ~= $28.
Their worst recent sales year, 2009, saw sales drop 11% and margins fall to 13% before recovering in 2010.
If 3-5yr margins drop to 24% (12 year avg), value/share ~= $28.
Their worst recent sales year, 2009, saw sales drop 11% and margins fall to 13% before recovering in 2010.
So if you don't see virus meaningfully affecting attendance numbers over the next 2-4 years, this looks cheap to me. Amusement parks also seem to have a pretty stable demand over time -- aside from that I have no unique insights about the business.
