Can Six Flags Entertainment Stock Beat the Market?

It's challenging to beat the stock market. Many people use the S&P 500 index as a proxy, and there are many low-cost mutual funds and exchange-traded funds that replicate the index's performance. When looking at stocks, it's important to compare your potential return with a benchmark since you could easily invest your money passively.

Turning to the consumer sector, Six Flags Entertainment (NYSE: FUN) has struggled, and that's reflected in its stock price. Does this represent a value opportunity that's poised to beat the S&P 500 over the long haul?

It's time to examine the company closer.

Image source: Getty Images.

The underlying business

Six Flags merged with Cedar Fair in 2024, and it's now the largest theme park operator in North America. Its holdings encompass 26 amusement parks, 15 water parks, and nine resorts.

With most of its properties located in the United States, the company's results are sensitive to the domestic economy. Consumers have been weighed down by high prices and a soft jobs market. That's undoubtedly played a role in Six Flags' weak results, but the company hasn't executed its plan following the merger.

Naturally, more people go to theme parks during the spring and summer, making Six Flags' results seasonal. The company produces about 70% of its revenue in the second and third quarters.

Its third-quarter revenue fell 2.3% year over year to $1.3 billion. While attendance increased slightly, spending per attendee dropped 3.6%. Both admissions and in-park product spending fell.

Six Flags recently reported results for the fourth quarter of 2025. There were different numbers of operating days this year versus last year, but revenue per operating day increased 7%, with attendance down 2% and spending up 8%. Still, it's difficult to draw any conclusions given it's a seasonally weaker quarter.

Market beater or laggard?

Management has a plan to turn around operations and generate revenue growth via higher attendance and spending. This includes focusing on the guest experience, introducing new rides, and implementing an updated marketing strategy. It hopes to increase spending through pricing initiatives and improving food and beverage offerings, among other initiatives.

While management has also focused on cutting expenses, the other steps will take time. Meanwhile, Six Flags faces competition from many different entertainment venues.

The share price reflects the current results and future challenges. Six Flags' stock has cratered 62.6% over the last year through Feb. 19. During this time, the S&P 500 returned 13.7%.

The company reported a loss under generally accepted accounting principles (GAAP), so investors can't use the price-to-earnings (P/E) ratio as a valuation measure. Turning to price-to-sales (P/S), Six Flags' shares trade at a 0.6 multiple, down from 1.3 a year ago. That's a fraction of the S&P 500's P/S ratio of 3.4.

The valuation seems attractive based on the historical multiple and relative to the market. However, given Six Flags' challenges in turning around sales growth, I'd say beating the S&P 500 over the long term remains an uphill battle.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Six Flags Entertainment. The Motley Fool has a disclosure policy.