Six Flags Entertainment [FUN 7.03%] took a hit today. Down 5.5% by late morning. Funny thing is, the news wasn’t exactly bad. Sometimes the market has a sense of humor, a dark one.
Stifel’s Wieczynski stuck to his “buy” rating, a $25 target. Analysts. They deal in hopes and projections. I deal in realities, and the reality is, numbers don’t lie, but they can be…massaged.
The Unloading
Six Flags is selling off seven parks to EPR Properties [EPR 0.50%] for $331 million. A tidy sum. Valleyfair, Worlds of Fun, Michigan’s Adventure, that water park down in Galveston, the St. Louis park, Great Escape, and La Ronde in Montreal. They’re shedding assets. Like a man ditching baggage before a long trip.
These parks brought in $260 million in revenue last year, $45 million in adjusted EBITDA. Money that won’t be there next year. Wieczynski says that’s okay. He’s an optimist. I’m…a realist. The market doesn’t always reward subtraction, even if it’s logical.
The Analyst’s Angle
“Some might disagree,” Wieczynski writes. They usually do. Disagreement is the lifeblood of the market. The stock price tells you that much. He calls these parks “underutilized” and “non-core.” Translation: they weren’t pulling their weight. They were a drain, needing capital that could be better spent elsewhere.
Six percent of EBITDA, he says. Not a fortune. But that capital expenditure…$480 million last year. That’s a lot of steel and fiberglass. A lot of potential for things to go wrong. He thinks reinvesting the cash will create “significant upside.” A phrase analysts use when they’re hoping for a miracle.
A Gamble, But…
Six Flags went into negative free cash flow last year, for the first time since…well, since the world went sideways. That’s a warning sign. A flashing red one. But lightening the load, shedding the dead weight…it could be a smart move. A calculated risk.
The market reacted negatively today. It often does to change. It prefers the familiar, even if the familiar is slowly sinking. Whether this is a buy…that depends on your stomach for turbulence. I’m watching. The numbers will tell the story. And the numbers, unlike people, don’t lie. Not usually.
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2026-03-06 19:32