This bull vs. bear standoff looks at whether Seaworld Entertainment (NYSE: SEAS) is a value play or value trap.
BULL CASE: Dan Burrows @ InvestorPlace Seas Now That SeaWorld Has Sunk, Buy SEAS Stock
Burrows notes that the valuation is very compelling. Almost too cheap to ignore at this point. Burrow points to the fundamentals to reassert his buy thesis, noting that despite the poor attendance numbers it’s still quite a cash generating machine. Burrows states,
Meanwhile, cash is king, and SEAS is swimming in it. Cash flow grew to $121 million from $74 million a year ago. That’s ample liquidity to invest in the business or give more cash back to shareholders. Lastly, Wednesday’s selloff means SeaWorld stock now goes for 11 times forward earnings, or 26% cheaper than the broader market. That makes it look like a bargain.
BEAR CASE: Daniel Jones @ SEEKINGALPHA SeaWorld's Stock Can't Swim
Jones’ strongest case is that SeaWorld will still see some downside, despite the beating it has taken. He tries convincing investors that Disney is the better buy. Although it is in the theme park business, that’s not the core of its business. In any case, Jones doesn’t think the headwinds from bad press are over for the stock price. He notes,
Currently, it's not good to be a SeaWorld shareholder. While the company has done alright in the past, its recent performance indicates some significant weaknesses. Admittedly, some of this decline is due to promotional activities, but with business declining not just below forecasts but also below what management reported a year ago, it's possible that the theme park operator could see even tougher times ahead.