Falling Knife: Why Six Flags Entertainment (SIX) Just Fell 15%


 
 
03:46 10/24/2018

Don’t try to catch the falling knife at Six Flags Entertainment SIX .

The stock just plummeted from $67 to $54 and may not stopping falling until $50 at this rate. All thanks to horrendous earnings.

Granted, it may appear to be technically oversold, but I wouldn’t touch it.

Just last night, the company posted profits of $2.16 a share on $619.8 million revenue.

That missed Street expectations of $2.32 on $633 million revenue. The good news is that SIX achieved 7% growth year over year. And 5% of sales growth did come from increased attendance. But such a wild miss isn’t something we can overlook

Not helping is its $2.1 billion debt load.

Two, analysts only expect SIX to grow earnings at an annual pace of 6% over the next five years. That’s doesn’t exactly justify a 25x earnings multiple.

Investors are nervous and selling for good reason here.

Even after such a big gap lower, SIX is just not the stock to own right now. And the last thing you want to do is attempt to catch the falling knife.






This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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