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Six Flags Roller Coaster Derails - Analyst Blog

Posted: 7/9/2014 1:10:00 PM
Referenced Stocks: SIX;TWTR;ISCA;DVD

Six Flags Entertainment Corporation ( SIX ) recently suffered a setback when a roller coaster at its Magic Mountain amusement park derailed as the result of a tree branch falling on the track. The front part of the roller coaster isolated and dangled at about a 45 degree angle from the track.

The Ninja ride carried 22 people who continued to hang 20 to 30 feet above the ground for three to four hours. Reportedly, four people received minor injuries. The ride would remain shut till the accident is investigated.

Six Flags Entertainment Corp. is the world's largest amusement park corporation with properties in Mexico, the U.S., and Canada. The company maintains 18 properties throughout North America including theme parks, thrill parks, water parks, and family entertainment centers.

This is not the first time that a Six Flags roller coaster has met with an accident. In Jul 2013, Six Flags in Arlington had to shut down its Texas Giant roller coaster after a woman fell from her seat and died. According to Ohio-based Center for Injury Research and Policy at Nationwide Children's Hospital, between 1990 and 2010, more than 92,000 children were injured in amusement ride-related incidents, which implies more than 4,000 injuries per year.

These events hurt the image of amusement parks. In fact, there were posts on Twitter, Inc. ( TWTR ) in which people expressed their apprehension over riding a roller coaster again. Footfall at Six Flags' amusement parks may suffer as a result of the accident.

However, the company continues to expand in emerging markets, which are expected to grow two to three times faster than developed nations like the U.S. This is expected to position the company well despite the headwinds.

Six Flags currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Dover Motorsports Inc. ( DVD ) and International Speedway Corp. ( ISCA ). Both these stocks carry a Zacks Rank #2 (Buy).

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