Jim Cramer Discusses Reasons Why Six Flags Stock Got "Really Obliterated"

Six Flags Entertainment Corporation (NYSE:FUN) is one of the stocks that received Jim Cramer’s latest comments. Cramer noted the company’s significant leverage ratio, as he remarked:

“What went wrong? In a word, everything. Six Flags has been hit with macroeconomic headwinds and some very company-specific problems, creating a perfect storm of poor attendance… What makes this so much more worse? Six Flags has a terrible balance sheet, that’s why the stock’s really obliterated. Both Six Flags and Cedar Fair went into a merger process with a fair amount of debt. And the current Six Flags now has a sky-high leverage ratio of 6.3. Anything above three is considered high. Anything above four is very high. And anything above that is, well, let’s just say, precarious…

The real question is whether Jana Partners in combination with Kelce can help save Six Flags. And the answer, only if the company lets them. Jana’s got a great track record, maybe Kelce can rope in Taylor Swift’s legion of fans, on top of Chiefs fans. Given that…they like the new CEO, I’m feeling a little more optimistic about Six Flags, especially with gasoline prices coming down hard. That said, it certainly won’t be easy because right now this company is a disaster. Before they can turn anything around, they desperately need to clean up the balance sheet and maybe close some more underperforming parks.

Here’s the bottom line: While Six Flags’ new management should be able to turn things around with some help from Jana Partners and Travis Kelce, I wouldn’t stick your neck out in this one unless you’re willing to be incredibly patient, because it’s going to take a while. And there’s always the chance that the company itself can’t make it if the weather’s bad or the parks keep having operational issues.”

Six Flags Entertainment Corporation (NYSE:FUN) runs a collection of amusement parks, water parks, and resort properties.

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Disclosure: None. This article is originally published at Insider Monkey.