Six Flags (SIX)
Six Flags, the theme park company that can never seem to be as good a theme park company as the big movie companies, has the worst current ratio on today’s list: 0.37. Consider that if it were just a small amount lower, it would mean that Six Flags had three times as much debt as it had assets. Nobody would want to come anywhere near stock in such a company, were it not that operating a theme park tends to be a highly profitable business. Six Flags has an operating margin of 34%, and even after factoring in its debt payments, it has a profit margin of 20.2%, so there is value here, even if there’s none on the balance sheet. But is there so much value that SIX shares should be trading at an all-time high, eight times what they traded for in 2010? Maybe, if the company was showing growth that could pull it out of the debt morass, but it isn’t. Revenue may be slightly up over the next two years, but EPS will likely be lower. Don’t try to capture any of these flags.
Chart courtesy of www.stockcharts.com