Reliable Long-term Trend to Profit From: SeaWorld Entertainment, Inc. (SEAS), DaVita Inc. (DVA)

The shares of SeaWorld Entertainment, Inc. have increased by more than 104.50% this year alone. The shares recently went down by -2.77% or -$0.79 and now trades at $27.75. The shares of DaVita Inc. (NYSE:DVA), has slumped by -11.32% year to date as of 12/04/2018. The shares currently trade at $64.07 and have been able to report a change of 2.22% over the past one week.

The stock of SeaWorld Entertainment, Inc. and DaVita Inc. were two of the most active stocks on Tuesday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Next 5Y EPS Growth: -6.00% versus 23.70%

When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that SEAS will grow it’s earning at a -6.00% annual rate in the next 5 years. This is in contrast to DVA which will have a positive growth at a 23.70% annual rate. This means that the higher growth rate of DVA implies a greater potential for capital appreciation over the years.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. SEAS has an EBITDA margin of 21.87%, this implies that the underlying business of SEAS is more profitable. The ROI of SEAS is -6.90% while that of DVA is 8.80%. These figures suggest that DVA ventures generate a higher ROI than that of SEAS.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, SEAS’s free cash flow per share is a positive 7.71, while that of DVA is positive 2.06.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for SEAS is 0.80 and that of DVA is 1.80. This implies that it is easier for SEAS to cover its immediate obligations over the next 12 months than DVA. The debt ratio of SEAS is 4.05 compared to 2.67 for DVA. SEAS can be able to settle its long-term debts and thus is a lower financial risk than DVA.


SEAS currently trades at a forward P/E of 25.79, a P/B of 6.44, and a P/S of 1.80 while DVA trades at a forward P/E of 13.57, a P/B of 2.79, and a P/S of 0.93. This means that looking at the earnings, book values and sales basis, DVA is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of SEAS is currently at a -6.72% to its one-year price target of 29.75. Looking at its rival pricing, DVA is at a -17.63% relative to its price target of 77.78.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), SEAS is given a 2.70 while 2.20 placed for DVA. This means that analysts are more bullish on the outlook for SEAS stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for SEAS is 7.01 while that of DVA is just 2.46. This means that analysts are more bullish on the forecast for DVA stock.


The stock of SeaWorld Entertainment, Inc. defeats that of DaVita Inc. when the two are compared, with SEAS taking 3 out of the total factors that were been considered. SEAS happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, SEAS is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SEAS is better on when it is viewed on short interest.

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