Is Seaworld Entertainment On Its Way To Bottom Out?

SeaWorld Entertainment Inc (NYSE:  SEAS)’s stock fell by 9.41% on Monday and is down by over 45% since last year. The decline on Wednesday was on the back of SeaWorld disappointing the Street yet again with its quarterly earnings number. However, after falling continuously for a year, is the stock now on its way to bottom out or will it continue to fall?

Flop Show

For the third quarter, SeaWorld Entertainment posted revenue of  $495.8 million, down 8% year. The EPS came at $1.01, way below EPS of $1.34 it reported for the same quarter last year and  also below the consensus analysts estimate of $1.13. The company attributed the bad results to the 5.2% quarter on quarter decline in attendance at its theme park.

Blackfish Still Haunts

An article published on Wednesday on Fortune reported how “the anti-SeaWorld documentary “Blackfish” seems to be a perennial favorite on lists of suggested documentaries to watch on Netflix”. The article also quoted Tuna Amobi, an analyst at S&P Capital, saying that, “the backlash generated by Blackfish has lasted longer than he thought it would, and that it seems to be continuing.”

Zacks Pulls The Trigger

Following the dismal results, analysts at Zacks downgraded the stock on Wednesday from Neutral to Underform while keeping their price target steady at $17.70. This added fuel to the fire and resulted in the stock declining even further.

Cramer Cautions

Yesterday on CNBC's "Cramer's Stop Trading", Jim Cramer, mentioned that a lot of people are trying to catch a falling knife by buying shares of SeaWorld Entertainment right now. Although he acknowledged that  Seaworld has an attractive dividend yield, he advised investors to refrain from buying the stock as it is still on the "butcher block" and the rsik-reward ratio is not favorable.

Only time can tell whether SeaWorld will be bottoming anytime soon or not, but as of now investors should definitely resort to caution while taking any kind of position in the stock.