SeaWorld Entertainment Inc (SEAS) IPOs..Beware, Sharks In the Water

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Feeding on krill
Granted, SeaWorld tried to allay investor concerns with assurances that it will be drawing down capital spending in the years to come, aiming to boost free cash flow and hold capex down to no more than 10% of annual revenues. Were this promise applied to last year’s results, SeaWorld could theoretically have hauled in $50 million in cash profits than it actually did.

Still, that doesn’t look like enough profit to justify the stock’s price — not to this Fool, at least. Fact is, even if SeaWorld Entertainment Inc (NYSE:SEAS) makes good on its promise to begin paying a $0.20 quarterly dividend next quarter, investors chasing the 2.4% dividend yield that this implies look likely to take a bath on this IPO.

My advice to new owners of the SeaWorld Entertainment Inc (NYSE:SEAS) IPO? Enjoy the ride while it lasts. Because sooner or later, you’re gonna get dunked.

The article SeaWorld IPOs — but Beware Sharks In the Water originally appeared on Fool.com and is written by Rich Smith.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Walt Disney (NYSE:DIS).

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