United Parks & Resorts (PRKS)

Theme park operator United Parks & Resorts (NYSE:PRKS) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 3.5% year on year to $286.9 million. Its GAAP loss of $0.29 per share was 26.7% below analysts’ consensus estimates.

Company Overview

Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE:PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.

Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.

Competitors offering amusement park experiences nationally include Six Flags (NYSE:SIX), Cedar Fair (NYSE:FUN), and Walt Disney (NYSE:DIS).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, United Parks & Resorts grew its sales at a sluggish 5.2% compounded annual growth rate. This wasn’t a great result compared to the rest of the consumer discretionary sector, but there are still things to like about United Parks & Resorts.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. United Parks & Resorts’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.1% annually. Note that COVID hurt United Parks & Resorts’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.

United Parks & Resorts also discloses its number of visitors, which reached 3.4 million in the latest quarter. Over the last two years, United Parks & Resorts’s visitors were flat. Because this number aligns with its revenue growth during the same period, we can see the company’s monetization was fairly consistent.

This quarter, United Parks & Resorts missed Wall Street’s estimates and reported a rather uninspiring 3.5% year-on-year revenue decline, generating $286.9 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 2.3% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average. At least the company is tracking well in other measures of financial health.

United Parks & Resorts’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 26.9% over the last two years. This profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.

In Q1, United Parks & Resorts generated an operating profit margin of 5.9%, down 1.6 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

United Parks & Resorts’s EPS grew at an astounding 34.5% compounded annual growth rate over the last five years, higher than its 5.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q1, United Parks & Resorts reported EPS at negative $0.29, down from negative $0.17 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects United Parks & Resorts’s full-year EPS of $3.75 to grow 20.4%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

United Parks & Resorts has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 12.2% over the last two years, slightly better than the broader consumer discretionary sector.

United Parks & Resorts burned through $31.19 million of cash in Q1, equivalent to a negative 10.9% margin. The company’s cash burn was similar to its $15.84 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

United Parks & Resorts’s five-year average ROIC was 18.3%, higher than most consumer discretionary businesses. This illustrates its management team’s ability to invest in profitable growth opportunities and generate value for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, United Parks & Resorts’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

United Parks & Resorts reported $75.67 million of cash and $2.26 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $688.4 million of EBITDA over the last 12 months, we view United Parks & Resorts’s 3.2× net-debt-to-EBITDA ratio as safe. We also see its $94.88 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its EPS missed significantly and its revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded up 1.1% to $47.69 immediately after reporting.

Updated: June 14, 2025 at 10:50 PM EDT

Before deciding whether to buy United Parks & Resorts or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

United Parks & Resorts is a fine business. Although its revenue growth was weak over the last five years and analysts expect growth to slow over the next 12 months, its impressive operating margins show it has a highly efficient business model. And while its number of visitors has disappointed, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders.

United Parks & Resorts’s P/E ratio based on the next 12 months is 8.5x. Looking at the consumer discretionary landscape right now, United Parks & Resorts trades at a pretty interesting price. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $57.50 on the company (compared to the current share price of $41), implying they see 40.2% upside in buying United Parks & Resorts in the short term.