Presented by Aditi Das Jordan Peasel

Yanan(Phoebe) Tan Chris Zakhem

NYSE: SIX

Presented on 12/8/2015

2

Investment Manager

• Aditi Das• Senior • Accounting &

Finance

• Jordan Peasel• Senior • Accounting &

Finance

• Chris Zakhem• Senior • Finance & Minor

in Chemistry

• Phoebe Tan• Senior • Finance &

Minor in Statistics

3

AgendaScreening Process

Company Review

Microeconomics Conditions

Industry Review

Recent Stock Performance

Financial Analysis

Financial Projection

Valuation

Recommendation

4

Screening Process

Market Cap: $4.88 B

Piotroski’s Test: 6

DiversificationStrong ROE

Six Flags

5

Company Overview

2014 Annual Report

• 16 Theme Parks in the US• 1 Theme Park in Canada • 1 Theme Park in Mexico

• Looking to add another in Mexico

Six Flags has over 800 rides, 130 of them are roller coaster rides

Has rights to Bugs Bunny, Daffy Duck, Tweety Bird, Yosemite Sam, Batman, Superman, Yogi Bear, Scooby-Doo, The Flintstones for merchandise, advertisement and entertainment

6

Company Review

2014 Annual Report; Bloomberg

55%

5%

38%

1%

Revenue Breakdown

Theme Park Admissions

Sponsorship, Licensing & Other

Theme Park Food, Mer-chandise and Other

Accomodations Revenue

12/1/2

010

4/1/2

011

8/1/2

011

12/1/2

011

4/1/2

012

8/1/2

012

12/1/2

012

4/1/2

013

8/1/2

013

12/1/2

013

4/1/2

014

8/1/2

014

12/1/2

014

4/1/2

015

8/1/2

015

12/1/2

0150.00x

10.00x20.00x30.00x40.00x50.00x60.00x70.00x80.00x

P/E 5yr Trend

Date

P/E

7

SWOT Analysis• Strong Diversification of

services within Theme Parks• Exclusive rights on characters

to be used in Theme Parks • Well Designed Website

• High R&D Costs• High Sunk Costs• High Capital Expenditures• Dependence on Seasonal

Workforce

• International Growth through franchising in Europe and Asia

• Discussions of new park in Mexico

• Economic Recession• Rapid development in

technology• Natural Disasters, contagious

diseases, terrorism

2014 Annual Report; Bloomberg; El Financiero

8

Key Risks

2014 Annual Report

Cyber Security

Risks

Risks of Accidents

Not Adequate Insurance Coverage

Intellectual Property must be

protected

Economic Conditions Affect Third

Party Contracts

Other Leisure

Alternatives

9

Macroeconomics ConditionsSpending and Adolescents within the United States

Domestic and International Inbound Trips into the United States

IBIS

10

Industry Review

Barriers to Entry

Threat of Substitutes

Bargaining Power of Suppliers

Bargaining Power of Buyers

Competitive Rivalry Porter’s

Five Forces53%

17%

9%

8%

7%6% Market Share

Walt Disney Company

Universal Parks and Resorts

SeaWorld Parks and Enter-tainment

Cedar Fair

Six Flags

Other

4%

55%25%

16%

Product Segmentation

Sponsorship Licensing and Other Fees

Admissions

Food and Beverages

Merchandise

IBIS

11

Recent Stock PerformanceSix Flags is currently trading above the 20 day and 200 day moving average

Yahoo! Finance

12

Recent Stock PerformanceOut of its competitors, Six Flags is trading above

Yahoo! Finance

13

Financial Analysis

2010 2011 2012 2013 201447.00%

48.00%

49.00%

50.00%

51.00%

52.00%

53.00%

54.00%

55.00%

56.00%

50.07%

53.10%

54.05%54.58%

55.10%

Gross Margin

2010 2011 2012 2013 20140.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%64.94%

1.30%

37.66%

14.13%9.70%

Net Income Margin

2014 & 2013 10-K

14

Financial Analysis

2010 2011 2012 2013 20140.00x

0.50x

1.00x

1.50x

2.00x

2.50x

3.00x

3.50x

4.00x

4.50x

1.30x 1.40x

4.20x

1.63x1.30x

Current Ratio

2010 2011 2012 2013 20140.00x

0.50x

1.00x

1.50x

2.00x

2.50x

3.00x

3.50x

4.00x

1.01x 1.13x

3.62x

1.02x

0.57x

Quick Ratio

2010 2011 2012 2013 20140.00x

0.50x

1.00x

1.50x

2.00x

2.50x

3.00x

3.50x

4.00x

4.50x

5.00x

1.05x

2.33x

4.31x

3.84x

3.13x

Interest Coverage Ratio

2014 & 2013 10-K

15

DuPont Analysis

2014 & 2013 10-K

2010 2011 2012 2013 20140.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

350.00%

400.00%

84.68%

338.88%

190.46%

76.93% 71.27%

Tax Burden

2010 2011 2012 2013 20140.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00% 554.82%

2.52%

103.45%70.69% 69.94%

Interest Burden

2010 2011 2012 2013 20140.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

13.82%15.20%

19.11%

25.99%

19.46%

Operating Margin2010 2011 2012 2013 2014

0.00x0.05x0.10x0.15x0.20x0.25x0.30x0.35x0.40x0.45x0.50x

0.36x0.38x

0.35x

0.43x0.46x

Asset Turnover

2010 2011 2012 2013 20140.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%73.00%

1.71%

45.35%42.02%

50.93%

ROE

2010 2011 2012 2013 20140.00x

2.00x

4.00x

6.00x

8.00x

10.00x

12.00x

3.15x 3.45x 3.44x

6.99x

11.32x

Leverage

16

Comparable Company Analysis

SeaWorld Entertainment, Inc. (NYSE:SEAS)• Operates as a theme park and entertainment company in the U.S.• Features marine-life theme parks in Orlando, San Antonio, and San Diego• Owns Busch Garden theme parks and other various theme parks across the U.S.

Cedar Fair, L.P. (NYSE:FUN)• Owns and operates amusement and water parks, as well as hotels in the U.S. and Canada• Operates 11 amusement parks, 3 outdoor water parks, and 5 hotels• Notable parks include Kings Dominion in Richmond and Cedar Point on Lake Erie

Merlin Entertainments plc (LSE:MERL)• Operates visitor attractions worldwide• Attractions include LEGOLAND, SEA LIFE, and the Dungeons• Headquartered in Poole, U.K.

Oriental Land Co., Ltd. (TSE:4661)• Operates and manages theme parks and hotels in Japan• Parks include Tokyo Disneyland and Tokyo DisneySea• Headquartered in Japan

Cap IQ

17

Greenblatt Ratios

Cap IQ

SIX SEAS MERL 46610.0000x

0.0500x

0.1000x

0.1500x

0.2000x

0.2500x 0.2351x

0.0945x

0.2344x 0.2317xEBIT / Tangible Assets

SIX SEAS MERL 46610.0000x

0.0100x

0.0200x

0.0300x

0.0400x

0.0500x

0.0600x

0.0700x

0.0467x0.0524x

0.0583x

0.0501x

EBIT / EV

SIX SEAS MERL 46610.0000x

0.0500x

0.1000x

0.1500x

0.2000x

0.2500x

0.3000x

0.3500x

0.2818x

0.1469x

0.2927x0.2818x

Sum of Ratios

18

Comparable Company Analysis

• We used P/E, P/Forward EPS, and P/Sales

• Median multiples were selected and applied against SIX’s financial data

• We equally weighted each of these multiples for a valuation of $40.35

Bloomberg; Cap IQ

Price /LTM FY1

Company Name Ticker EPS EPS SalesSeaWorld Entertainment, Inc. NYSE:SEAS 44.2x 18.9x 1.1xCedar Fair, L.P. NYSE:FUN 25.6x 15.8x 2.5xMerlin Entertainments plc LSE:MERL 26.4x 21.3x 3.4xOriental Land Co., Ltd. TSE:4661 31.4x 31.6x 5.0x

Six Flags Entertainment Corporation NYSE:SIX 42.1x 27.9x 4.1x

Minimum 25.6x 15.8x 1.1xMean 31.9x 21.9x 3.0xMedian 28.9x 20.1x 2.9xMaximum 44.2x 31.6x 5.0x

Comparable Companies ValuationSIX Data 1.3 1.9 13.1Selected Multiple 31.9x 21.9x 3.0xPrice per Share 40.20$ 41.61$ 39.24$

Average Price 40.35$

19

Revenue Projection

(in thousands except per capita)2015E 2016E 2017E 2018E 2019E 2020E

Theme Park Revenue CalculationAttendance 26,115 26,601 27,096 27,600 28,113 28,637 Admissions 26.45 27.96 29.55 31.24 33.02 34.90 Non-Admissions 18.45 18.96 19.49 20.03 20.58 21.15 Guest Revenue - Admissions 690,666 743,643 800,684 862,099 928,226 999,425 Guest Revenue - Non-Admissions 481,766 504,340 527,972 552,711 578,609 605,721 Guest Revenue - Total 1,172,432 1,247,983 1,328,655 1,414,810 1,506,835 1,605,146 Guest Revenue - Actual 1,172,435 1,247,989 1,328,664 1,414,822 1,506,851 1,605,165

Growth Rate - Admissions 7.67% 7.67% 7.67% 7.67% 7.67% 7.67%Growth Rate - Non-Admissions 4.69% 4.69% 4.69% 4.69% 4.69% 4.69%

Forecast

(in thousands except per capita)2015E 2016E 2017E 2018E 2019E 2020E

Theme park admissions 690,744 743,727 800,774 862,197 928,331 999,538 Growth Rate 7.67% 7.67% 7.67% 7.67% 7.67% 7.67%

Theme park food, merchandise and other 481,691 504,262 527,890 552,625 578,520 605,627 Growth Rate 4.69% 4.69% 4.69% 4.69% 4.69% 4.69%

Forecast

2014 & 2013 10-K

20

WACC Calculation

Bloomberg

Risk Free Rate 2.29%Market Risk Premium 5.92%Beta (5-year) 0.905

CAPM Cost of Equity 7.644%Realized Return for past 2 years 25.96%Adjusted Cost of Equity 11.31%

CAPMCurrent Share Price $53.06Average Shares Outstanding 91,837 Market Value of Equity 4,872,883$

Market Value of Debt 1,515,382

Equity Weight 76.28%Debt Weight 23.72%

Cost of Equity 11.31%Cost of Debt 4.69%

Tax Rate 32.49%

WACC 9.38%

Weighted Average Cost of Capital

• Risk Free Rate: US 10-Year Treasury Note• Adjusted Cost of Equity: 80% of CAPM Cost of

Equity + 20% of Realized Return for past 2 years• Cost of Debt: From the projected debt schedule

21

Discounted Cash Flow2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

EBIT 310,993 339,949 379,607 423,844 471,185 523,590 Less: Taxes (66,403) (85,593) (99,052) (113,348) (128,646) (145,575) Add: Depreciation &Amortization 168,999 148,045 128,075 108,107 105,107 119,687 125,334 131,271 137,467 144,090

changes in accounts receivable (1,794) 11,062 22,086 7,214 (6,503) 3,446 3,793 4,147 4,304 4,681 Changes in inventories (2,569) 1,307 (108) (1,073) 346 1,412 1,555 1,700 1,764 1,919 Changes in accounts payable (9,519) (243) 884 (5,149) 317 1,293 1,423 1,556 1,615 1,757

Less: Capital Expenditure 91,680 99,989 101,853 108,660 112,526 116,474 120,561 124,792 129,171 133,703

Free Cash Flow 243,645$ 254,003$ 281,403$ 312,685$ 346,382$ 383,559$ Discount Factor 9.38%PV of Free Cash Flow 238,247 227,085 230,016 233,677 236,671 239,607 Sum of PV of FCF 1,405,303$

ForecastHistorical

Long-Term Growth Rate 3.50%Gordon Growth Free Cash Flow 6,756,510 Present Value 4,220,761

Terminal Growth

Enterprise Value 5,626,064 Less: Net Debt (1,304,554)

Equity Value 4,321,510 Shares Outstanding 91,837 Price Per Share 47.06$

Value Per Share

47.06$ 2.50% 3.00% 3.50% 4.00% 4.50%8.38% 48.86$ 53.56$ 59.22$ 66.17$ 74.92$ 8.88% 44.06$ 47.95$ 52.55$ 58.11$ 64.92$ 9.38% 39.99$ 43.25$ 47.06$ 51.57$ 57.02$ 9.88% 36.50$ 39.26$ 42.45$ 46.19$ 50.62$

10.38% 33.47$ 35.83$ 38.54$ 41.67$ 45.34$

Terminal Growth

2014 & 2013 10-K

22

Recommendation

Positives: Dividend Yield is 4.42% & New Market Growth; Negatives: High and Volatile PE Ratio

We recommend adding Six Flags to the Watch List

Current Stock Price

Comparable Value

DCF Valuation

$52.55

$40.35

$47.06