Can Theme Parks Bounce Back In 2025?

Last year was a mixed bag for the country's leading theme and amusement park operators. Shares of Six Flags Entertainment (NYSE: FUN), Walt Disney (NYSE: DIS), and SeaWorld parent United Parks (NYSE: PRKS) moved higher in 2024, but none of them beat the market. And Universal Studios parent Comcast (NASDAQ: CMCSA) lost ground last year.

The combination of Cedar Fair and Six Flags was completed at the midpoint of last year, with the merged entity retaining the former's moniker but the latter's ticker symbol. SeaWorld Entertainment rebranded itself as United Parks last February. This is the extent of the excitement for the industry these days.

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Comcast is the only one of the operators to have chimed in this earnings season. Thursday's financial update showed a dip in the profitability of its theme parks business on flat year-over-year revenue growth. Disney checks in on Wednesday morning but has already braced shareholders for ho-hum growth at its domestic gated attractions through the next few quarters.

Six Flags and United Parks will announce earnings closer to the end of this month. Six Flags is the more interesting play here. United Parks has delivered negative revenue growth through four of the last six quarters and failed to crack 1.5% top-line growth during the two positive periods.

The new Six Flags has the potential to improve scalability as it optimizes its dramatically larger collection of thrill parks. By the end of this year, it expects to realize an annualized run rate of $120 million in cost synergies. The trick for Six Flags -- and all operators -- is to find a way to get the entrance turnstiles to click faster in 2025.

California dreaming

I did my part to support the industry this past week. I spent the last seven days traveling across Southern California with my family, visiting five parks run by three of the four publicly traded companies. Most of the country's theme parks are seasonal, with operations starting in the coming months as the weather warms up. In Southern California, like my home state of Florida, attractions operate year-round.

Six Flags Magic Mountain was my first stop. It's the only one I visited that was not yet open daily. My brief visit coincided with stormy weather that prevented me from riding some of my favorite coasters, including X2 and Twisted Colossus. But the California fires needed that rain, so I was grateful for the deluge.

We arrived with just a couple of hours left before closing, and given the challenging weather conditions, it was understandably empty. The Six Flags app had listed wait times as long as an hour for some of the marquee rides, but the person at the entrance processing our passes told us that everything was a walk-on -- and that was the case. I'm not proud of hitting only three coasters in a park with a world-leading 20 scream machines, but we moved on as the rain started to pick up.

Comcast's Universal Studios Hollywood was our next destination. In the shadow of the 36-story tower that serves as Universal Studios headquarters, the original movie studio theme park combines a handful of attractions and the iconic tram tour that drives past working backlot sets and cinematic experiences.

You never need more than a whole day to visit everything at the park, but it's good that I budgeted two days since Sunday was another day of heavy rain and light lines, followed by a sunnier and busier backdrop on Monday. This was my third visit to Super Nintendo World, a key area in the park that will be expanded in Florida when Comcast opens Epic Universe in May.

Anaheim was next, and for the next three days, I was at Disneyland and Disney's California Adventure. This was where I naturally encountered the largest crowds of the trip, even if the people traffic was substantially lighter on cold weekdays in late January than in more seasonally potent times of the year.

The week ended at Knott's Berry Farm, giving me a taste of both the Six Flags and Cedar Fair sides of the combined company. It had been six years since my last visit to Knott's, but the only new coaster at the park was a Snoopy-themed kiddie coaster. It peddles nostalgia and family-friendly fun. If the post-merger Six Flags can incorporate the cadence of ride openings of its namesake parks with the operations and customer service expertise of Cedar Fair, the ceiling is as high here.

You must be this tall to ride

I can't visit theme parks every week. The masses will need to join me at the turnstiles to make this a strong year for the industry. I'm not worried about Comcast's chances to bounce back in a major way in the springtime when Epic Universe opens at its busiest resort in Florida. Disney and United Parks may actually benefit from the spike in vacationers coming out to the Sunshine State, especially with the new Comcast park likely to hit capacity early and often.

Six Flags is as intriguing as its year is uncertain. It leans on local economies more than Disney or Comcast. This year, it shifted to a new season pass structure, where folks pay a healthy premium to visit both Six Flags and Cedar Fair attractions. With more options -- even at the local level in some markets -- it can really ramp up its value proposition.

Will parkgoers pay up? The stock is currently trading for just 14 times this year's projected earnings. There's a lot of debt here that pushes that multiple closer to 25 on an enterprise value basis, but there's a lot of potential for even better earnings growth if cost synergies, pass sales, and attendance levels exceed expectations. Will shareholders pay up? This year is going to be an interesting ride.

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Rick Munarriz has positions in Walt Disney. The Motley Fool has positions in and recommends Six Flags Entertainment and Walt Disney. The Motley Fool recommends Comcast and United Parks & Resorts. The Motley Fool has a disclosure policy.