Rising Costs, Aging Demographics And Extreme Weather Will Hamper Demand

Key Takeaways

• Structural demographic trends and evolving entertainment preferences threaten attendance, revenue growth, and Six Flags' long-term relevance.
  
• High debt and pressures on guest spending limit investment in upgrades, compress margins, and increase exposure to operational disruptions.
  
• Strong demand rebound, successful integration, effective new product launches, and strategic divestitures are enhancing recurring revenue, reducing costs, and improving financial flexibility.

Catalysts

Operates amusement parks and resort properties in North America.

• Long-term demographic shifts, such as aging populations and declining birth rates in North America, are expected to steadily shrink the core customer base for family-oriented amusement parks, leading to structural headwinds in attendance and sustained pressure on Six Flags' top-line revenue growth.
  
• Ongoing declines in discretionary consumer spending due to rising living costs and increased wealth inequality will likely suppress per-capita in-park spending and drive increased price sensitivity, resulting in lower average guest spend and compressing operating margins.
  
• Greater frequency of extreme weather events and climate volatility, compounded by climate change, is anticipated to further disrupt operations, force more unscheduled park closures, and inflate insurance and maintenance costs. This will result in more unpredictable revenues and downward pressure on net margins.
  
• Persistent high leverage and a heavy debt burden are expected to limit Six Flags' ability to invest adequately in innovative new attractions or meaningful park upgrades, risking declining guest interest and reducing the company's long-term earnings power.
  
• Competition from new forms of experiential entertainment, such as esports, immersive digital experiences, and indoor venues, is expected to divert consumer wallet share away from traditional theme parks, further eroding Six Flags' market relevance and likely leading to a decline in both revenue and EBITDA over time.

Six Flags Entertainment Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Six Flags Entertainment compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Six Flags Entertainment's revenue will grow by 2.9% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from -15.3% today to 7.1% in 3 years time.
• The bearish analysts expect earnings to reach $244.0 million (and earnings per share of $2.31) by about August 2028, up from $-483.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 13.9x on those 2028 earnings, up from -5.0x today. This future PE is lower than the current PE for the US Hospitality industry at 22.5x.
• Analysts expect the number of shares outstanding to grow by 1.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Six Flags Entertainment Future Earnings Per Share Growth

Risks

• The company is seeing a strong rebound in demand as weather normalizes, with July attendance rising 1% for the month and up to 8% in specific parks after key new attractions opened, indicating resilient consumer interest and supporting sustained revenue growth.
  
• Early response to new season pass programs and membership offerings is highly positive, with a surge in sales of 700,000 passes since end of Q2 and momentum building for both the remainder of 2025 and the start of 2026, enhancing recurring revenue stability.
  
• The merger integration with Cedar Fair is generating meaningful cost synergies, with $120 million in annualized savings targeted by year-end and ongoing tech platform harmonization and procurement centralization, resulting in permanently lower operating expenses and improving net margins.
  
• Strategic capital investments in high-performing parks, such as the launch of new major rides (e.g., AlpenFury at Canada's Wonderland), are driving double-digit increases in attendance and ancillary spending, demonstrating the company's ability to boost earnings through targeted reinvestment.
  
• Management is successfully executing asset sales and divestitures of non-core parks, which are expected to accelerate deleveraging, improve financial flexibility, and increase focus on the highest-margin assets-positively impacting future earnings and balance sheet strength.

Valuation

• The assumed bearish price target for Six Flags Entertainment is $23.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Six Flags Entertainment's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $60.0, and the most bearish reporting a price target of just $23.0.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $3.5 billion, earnings will come to $244.0 million, and it would be trading on a PE ratio of 13.9x, assuming you use a discount rate of 12.3%.
  
• Given the current share price of $23.79, the bearish analyst price target of $23.0 is 3.4% lower. The relatively low difference between the current share price and the analyst bearish price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.