Investor Alert

Feb. 22, 2020, 10:26 a.m. EST

Six Flags stock hammered after surprise loss, downbeat guidance and dividend cut

‘We didn’t think it could get worse … but it just did,’ says one analyst

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By Ciara Linnane, MarketWatch

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“Soft organic revenue trends, and increasing operating cost headwinds, primarily related to higher minimum and market wages, will be difficult to overcome in 2020,” the company said in a statement.

Six Flags said it’s cutting its quarterly dividend to 25 cents a share from 83 cents, a 70% reduction. However, the implied yield of 2.63% remains above the S&P 500s 1.79%, according to FactSet data.

Oppenheimer analysts Ian Zaffino and Mark Zhang stuck with their bullish outperform rating on the stock and said the numbers were in line with guidance.

“The outlook is mixed as the company will see headwinds in growing organic business and managing costs in FY2020,” they wrote in a note to clients. “However, the dividend reduction helps to de-risk the stock and improve financial flexibility. We will look for details of new management’s strategic plans during its investor day on 5/28.”

Jefferies analysts said they are sticking with a hold rating, welcoming that guidance appears to be “comfortably low.”

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“Changes to management, board, go-forward strategy and ultimately shareholder complexion are still forthcoming, all of which will be key factors in where valuation is re-established,” they wrote in a note. “Weakness in shares should continue.”

Six Flags stock has fallen 45% in the last 12 months, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.30%  has gained 20%.

Additional reporting by Tomi Kilgore

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Jan. 22, 2021 4:59p

Ciara Linnane is MarketWatch's investing- and corporate-news editor. She is based in New York.

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