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Friday, June 2, 2023

Here’s Why We Think SeaWorld Entertainment (NYSE: SEAS ) Is Worth Watching

The excitement of investing in a company that can turn its fortunes around is so attractive to some speculators that even companies with no revenue, no profits, and a track record of losses can manage to find investors. Unfortunately, these high-risk investments often have little chance of paying off, and many investors pay the price to learn their lesson. A money-losing company has yet to prove itself profitably, and eventually the inflow of outside money may dry up.

Despite the blue-sky era of investing in tech stocks, many investors still employ a more traditional strategy; buying shares of profitable companies such as sea ​​world entertainment (NYSE ticker: SEAS). Now this is not to say that this company presents the best investment opportunity, but profitability is a key component of business success.

Check out our latest analysis for SeaWorld Entertainment

How fast is SeaWorld Entertainment growing?

If you believed that markets were even vaguely efficient, you would expect a company’s stock price to follow its earnings per share (EPS) results over the long run. Therefore, it makes sense for experienced investors to keep a close eye on company earnings per share when conducting investment research. To the delight of shareholders, SeaWorld Entertainment has posted an impressive 60% CAGR over the past three years. While this growth rate cannot be sustained in the long term, it’s sure to catch the eye of potential investors. The EPS growth figures also benefited from share buybacks, signaling to the market that the company is financially strong enough to return capital to shareholders.

Revenue growth is an important indicator of sustainable growth, and combined with high earnings before interest and taxes (EBIT), it’s a great way for a company to maintain a competitive edge in the market. SeaWorld Entertainment’s EBIT margin remained largely unchanged over the last year, but the company should be pleased to report a 15% increase in revenue to US$1.7b. This is encouraging news for the company!

The chart below shows how a company’s bottom and top lines have progressed over time. To see actual numbers, click on the graph.

NYSE: SEAS Earnings and Revenue History for March 16, 2023

Luckily, we have access to analyst forecasts for SeaWorld Entertainment future profit.You can make your own predictions without looking, or you can Check out the pros’ predictions.

Are SeaWorld Entertainment insiders aligned with all shareholders?

Company leaders must act in the best interest of shareholders, so insider investment always provides reassurance to the market. So, it’s good to see SeaWorld Entertainment insiders putting a lot of money into the stock. Specifically, they hold $43 million worth of stock. That’s a lot of money and no small incentive to work hard. While that’s only about 1.2% of the company, that’s enough money to show alignment between business leaders and ordinary shareholders.

Seeing insiders investing in a business means a lot, but shareholders may wonder whether compensation policies are in their best interest. Our quick analysis of CEO pay seems to suggest that it does. For a company with a market capitalization between US$2.0b and US$6.4b, such as SeaWorld Entertainment, the median CEO compensation is about US$6.7 million.

SeaWorld Entertainment’s CEO received just $2 million in total compensation for the year ending December 2021. This appears to be a meager package, and may imply a certain respect for shareholder interests. CEO compensation is hardly the most important aspect for a company to consider, but if justified, it would increase confidence that leadership is looking after shareholder interests. More generally, it can also be a sign of good governance.

Should You Add SeaWorld Entertainment To Your Watchlist?

SeaWorld Entertainment’s earnings per share have been soaring, with high growth rates. The sweet spot is that insiders own a lot of stock, and the CEO is paid fairly well. The sharp increase in earnings shows that the business is going from strength to strength. Hopefully this trend will continue into the future. SeaWorld Entertainment definitely fits a few criteria, so we think it might be worth further consideration. However, you should always consider the risks.As an example, we found 2 Warning Signs of SeaWorld Entertainment You should know.

The beauty of investing is that you can invest in almost any company you want.But if you’d rather focus on stocks that show insider buying, here’s List of companies that have made insider purchases in the past three months.

Please note that insider trading discussed in this article refers to reportable transactions in the relevant jurisdictions.

Valuation is complicated, but we’re helping make it simple.

Find out if SeaWorld Entertainment might be overvalued or undervalued by viewing our comprehensive analysis, which includes Fair value estimates, risks and caveats, dividends, insider trading and financial health.

View free analysis

This article by Simply Wall St is general in nature. We use only an unbiased methodology to provide reviews based on historical data and analyst forecasts, and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or your financial situation. Our goal is to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no positions in any of the stocks mentioned.

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