Six Flags: Thrills and Chills
Daniel Snyder's success with his two highest-profile projects -- the Washington Redskins and the Six Flags amusement park chain -- hasn't been Super Bowl quality, to say the least. But while putting together a winning NFL franchise can be a herculean struggle, bringing Six Flags back to its former glory is quite possible, according to The Turnaround Letter.
Snyder, who made his millions in marketing, took control of Six Flags last year after the previous management catered too much to thrill-seeking teenagers. Meanwhile, the rides and attractions that were geared to families deteriorated. Snyder has promised a quick return to better times.
Well, he overpromised. The company recently warned investors that the turnaround would take longer than expected. That wiped away all the share gains that had occurred after Snyder took over. The stock (symbol SIX) initially doubled, roughly, to $12, but closed Thursday at $5.46, giving it a market value of $515 million.
But the Turnaround Letter, edited by George Putnam III, argues that Six Flags' long-term prospects are bright. The focus on family attractions will help the company tap a lucrative market. And although Six Flags carries $2 billion in debt, it holds substantial real estate assets, some of which may be undervalued on the company's financial statements. It plans to sell six parks to improve its balance sheet, and could sell excess real estate at other parks. Not only does Snyder have a big stake in Six Flags (he controls more than 11 million shares, or about 12% of the outstanding shares), he bought more as the price dipped. And the richest man in the world, Bill Gates, owns 10.8 million shares.
Still, this is a speculative stock, as its low share price suggests. Analysts estimate that the company will lose about a buck a share this year and 34 cents a share in 2007. Anyone say roller coaster?