Cedar Fair’s COO Bought More Shares

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At 16 times trailing earnings, Cedar Fair, L.P. doesn’t look too attractive in terms of value. At that multiple we would want to see reliable earnings growth. True, the company has been doing very well if we look at 2012 as a whole, but we don’t like the numbers from the crucial third quarter. Analyst consensus is for improved performance in 2013, and so the forward P/E is 14. However, Cedar Fair is notable for its dividend yield, currently at almost 5%. Dividend payments have not been very consistent over the last several years, but the company did manage a consistent 40 cent payment in each quarter of 2012 and combined with the so-so value characteristics it might be a good prospect for income investors. Trafelet Capital and Royal Capital were two hedge funds which had Cedar Fair among their five largest holdings at the end of September.

The company’s closest peer is Six Flags Entertainment Corp (NYSE:SIX). Six Flags is another high yield stock, but its multiples are much higher than Cedar Fair’s: it carries trailing and forward P/E multiples of 31 and 28, respectively. Its net income was up strongly last quarter versus a year earlier, but revenue growth was low and so we’re not sure that it’s sustainable. If it weren’t for the high yield, it would be a short candidate; it might be one in any case. Universal Parks is more or less buried within the rest of Comcast Corporation (NASDAQ:CMCSA)’s operations, but we can also look at The Walt Disney Company (NYSE:DIS) as a peer as well. Disney obviously has many other businesses, but its theme parks have been performing well this year. It trades about even with Cedar Fair in terms of P/E multiples, even though it is a much larger company with strong entertainment assets, though the dividend yield is considerably lower here. Revenue and earnings were up in the fourth quarter of its fiscal year (which ended in September) compared to the same period in the last fiscal year, and overall it might be a better value than Cedar Fair. Of course, income investors might see high yield stocks like Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) as better alternatives than Disney.

Related links:

10 cheap dividend stocks hedge funds love

October insider purchase at Six Flags

Disney and 9 more services stocks hedge funds love

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