Critical Survey: Royal Caribbean Cruises (NYSE:RCL) versus Six Flags Entertainment (NYSE:FUN)

Royal Caribbean Cruises (NYSE:RCL) and Six Flags Entertainment (NYSE:FUN) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Profitability

This table compares Royal Caribbean Cruises and Six Flags Entertainment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Royal Caribbean Cruises	20.97%	47.15%	10.19%
Six Flags Entertainment	-14.92%	-1.00%	-0.22%

Institutional & Insider Ownership

87.5% of Royal Caribbean Cruises shares are owned by institutional investors. Comparatively, 64.7% of Six Flags Entertainment shares are owned by institutional investors. 7.0% of Royal Caribbean Cruises shares are owned by company insiders. Comparatively, 1.8% of Six Flags Entertainment shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Royal Caribbean Cruises and Six Flags Entertainment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Caribbean Cruises	0	4	18	1	2.87
Six Flags Entertainment	1	2	11	0	2.71

Royal Caribbean Cruises presently has a consensus price target of $327.1429, suggesting a potential downside of 4.96%. Six Flags Entertainment has a consensus price target of $39.0714, suggesting a potential upside of 49.79%. Given Six Flags Entertainment’s higher probable upside, analysts clearly believe Six Flags Entertainment is more favorable than Royal Caribbean Cruises.

Earnings & Valuation

This table compares Royal Caribbean Cruises and Six Flags Entertainment”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Caribbean Cruises	$16.48 billion	5.67	$2.88 billion	$13.34	25.80
Six Flags Entertainment	$2.71 billion	0.98	-$231.16 million	($4.85)	-5.38

Royal Caribbean Cruises has higher revenue and earnings than Six Flags Entertainment. Six Flags Entertainment is trading at a lower price-to-earnings ratio than Royal Caribbean Cruises, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Royal Caribbean Cruises has a beta of 2.22, meaning that its stock price is 122% more volatile than the S&P 500. Comparatively, Six Flags Entertainment has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500.

Summary

Royal Caribbean Cruises beats Six Flags Entertainment on 14 of the 15 factors compared between the two stocks.

About Royal Caribbean Cruises

Royal Caribbean Cruises Ltd. operates as a cruise company worldwide. The company operates cruises under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands, which comprise a range of itineraries. As of February 21, 2024, it operated 65 ships. Royal Caribbean Cruises Ltd. was founded in 1968 and is headquartered in Miami, Florida.

About Six Flags Entertainment

Cedar Fair, L.P. owns and operates amusement and water parks, as well as complementary resort facilities. Its amusement parks include Cedar Point located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Knott's Berry Farm near Los Angeles, California; Canada's Wonderland near Toronto, Ontario; Kings Island near Cincinnati, Ohio; Carowinds in Charlotte, North Carolina; Kings Dominion situated near Richmond, Virginia; California's Great America located in Santa Clara, California; Dorney Park in Pennsylvania; Worlds of Fun located in Kansas City, Missouri; Valleyfair situated near Minneapolis/St. Paul, Minnesota; Michigan's Adventure situated near Muskegon, Michigan; Schlitterbahn Waterpark & Resort New Braunfels in New Braunfels, Texas; and Schlitterbahn Waterpark Galveston in Galveston, Texas. The company also owns and operates the Castaway Bay Indoor Waterpark Resort, Hotel Breakers, Cedar Point's Express Hotel, and Sawmill Creek Resort. Cedar Fair, L.P. was founded in 1983 and is based in Sandusky, Ohio.