SeaWorld Entertainment, Inc.’s (NYSE:SEAS) Shares Not Telling The Full Story

With nearly half of the companies in the United States having price-to-earnings ratios (or “P/E’s”) of more than 15x, you might want to consider it. SeaWorld Entertainment, Inc. (NYSE:SEAS) as an attractive investment with a P/E ratio of 11.6x. Although there may be an explanation for why it is so limited, it is unwise to take the P/E at face value.

SeaWorld Entertainment has been doing well lately, growing more revenue than any other company. One possibility is that the P/E is low because investors think this strong earnings performance may be less impressive going forward. If you like the company, you hope this doesn’t happen so you can pick up some shares when it’s worthless.

Check out our latest analysis of SeaWorld Entertainment

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Looking for the full picture on analyst estimates for the company? Then ours free The SeaWorld entertainment report will help you find out what’s on the horizon.

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Does growth correspond to a lower P/E?

To justify its P/E ratio, SeaWorld Entertainment will need to generate slower growth than the market is following.

If we evaluate the revenue growth of the last year, the company has recorded an excellent growth of 143%. Interestingly, EPS rose a total of 293 percent from three years ago due to growth over the past 12 months. Accordingly, shareholders would probably welcome those medium-term earnings growth rates.

Looking ahead now, EPS is expected to grow by 8.8% next year according to nine analysts following the company. That’s roughly the same shape as the 7.4% growth forecast for the broader market.

Given this information, we find it odd that SeaWorld Entertainment is trading at a below-market P/E. Apparently, some shareholders are skeptical about the forecast and have been accepting lower selling prices.

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The last word

Generally, our choice is to limit the use of the price-to-earnings ratio to determine what the market thinks about the overall health of the company.

We maintain that SeaWorld Entertainment is currently trading below expectations, as forecast growth is in line with the broader market. Given the average earnings outlook with market-like growth, we think there are potential risks that will put pressure on the P/E ratio. Some seem to be anticipating earnings volatility, as these conditions should normally provide more support for stock prices.

Before you decide on your opinion, we got it 1 warning sign for SeaWorld Entertainment You should know.

If these Concerns are causing you to reconsider your opinion on SeaWorld entertainment.Browse our interactive lists of high-quality stocks to find out what else is available.

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This Simply Wall St article is general in nature. We only provide opinions based on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to be financial advice. It does not provide advice to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide you with long-term analysis driven by fundamental data. Note that our analysis may not include recent price-sensitive company ads or quality content. Simply put, Wall St has no position in any of the listed stocks.

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