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Cedar Fair and Winnebago Industries have been highlighted as Zacks Bull and Bear of the Day

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·11-min read
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For Immediate Release

Chicago, IL – June 7, 2022 – Zacks Equity Research shares Cedar Fair, L.P. FUN as the Bull of the Day and Winnebago Industries, Inc. WGO asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Hess Corp. HES, Exxon Mobil Corp. XOM, and TechnipFMC FTI.

Here is a synopsis of all five stocks:

Bull of the Day:

Cedar Fair, L.P has momentum as consumers want to go to amusement parks this summer. This Zacks Rank #1 (Strong Buy) saw record net revenue through Memorial Day weekend as customers swarmed the parks.

Cedar Fair is an amusement park and resort operator which operates 13 properties including 11 amusement parks, 4 separately gated outdoor water parks and resort accommodations totaling more than 2,300 rooms and more than 600 luxury RV sites.

Headquartered in Sandusky, Ohio, Cedar Fair's parks are located in Ohio, California, North Carolina, South Carolina, Virginia, Pennsylvania, Minnesota, Michigan, Texas and Toronto, Ontario.

Record Revenue Through Memorial Day Weekend

On June 2, Cedar Fair released preliminary year-to-date net revenue through Monday May 30, 2022 which jumped 21%, or $60 million, to a record $343 million compared to the same 5-month period ending Monday, June 3, 2019.

The prior two years are not legitimate comparables as revenue was hit by the coronavirus pandemic in both of those years. The real comparable is from 2019.

Those who are coming to the parks are spending, driven by a 28%, or $12.93 increase, in in-park per captial spending to a record $59.70. Out-of-park revenue also rose 13%, or $5 million, to $45 million.

Some of this good news was offset by a decline in attendance, which fell by 210,000-visits to 5.2 million guests. However, if you exclude groups, which remains soft but is showing signs of improving, year-to-date attendance was up 4%.

Guests are Booking Early and Buying Season Passes

Cedar Fair guests are also buying for the future, with strength in sales of all-season products and advanced bookings at Cedar Fair's resort properties at Cedar Point, including its renovated Castaway Bay and the soon-to-be-open Sawmill Creek Resort.

Through Memorial Day, sales of 2022 season passes were up 24%, or $56 million, compared to the similar period in 2019. All-season dining and all-season beverage, which can be added onto the season passes, jumped 46% to $20 million.

The fiscal 5-month period through Memorial Day weekend traditionally represents about 20% of the Company's full-year operating days.

A Beat in the First Quarter

On May 4, Cedar Fair reported its first quarter results and beat the Zacks Consensus by $0.40 reporting a loss of $1.56 compared to the Zacks Consensus of a loss of $1.96.

Cedar Fair usually sees a loss in the first quarter as most of its parks are closed. It represents less than 5% of the full year next revenue.

But positive trends were already showing up in the business through the spring.

Analysts Raise Full Year Estimates

After the big beat, and the bullish commentary from the company, analysts have been raising earnings estimates. 3 estimates were raised for 2022 in the last 30 days pushing up the Zacks Consensus Estimate to $4.00 from $3.52 during that time.

That's earnings growth of 734.9% as the company lost $0.63 last year as it was still being impacted by the COVID pandemic.

Shares Fall in 2022

Cedar Fair will update its results through the key Fourth of July weekend in July. But the trends are in its favor this year. Consumers want to travel and amusement parks are at the top of the list.

But shares of Cedar Fair have fallen 4.2% year-to-date despite the pace of record revenue.

What gives?

Shares are cheap with a forward P/E of just 11.7 but the Street might be cautious about the entertainment and leisure companies as inflation continues to hit consumer's wallets. Will they end up staying home after all this summer as gas and food prices soar?

We'll soon see.

If you're an investor looking for a way to tap into summer fun, Cedar Fair should be at the top of your list.

Bear of the Day:

Are the good times over for Winnebago Industries, Inc. ? This Zacks Rank #5 (Strong Sell) is expected to see falling earnings in Fiscal 2023 after it was a pandemic winner the last 2 years.

Winnebago makes outdoor lifestyle products, including motorhomes, travel trailers, fifth-wheel products, pontoons, inboard/outboard and sterndrive powerboats and commercial community outreach vehicles under various brands including Winnebago, Grand Design, Chris-Craft, Newmar and Barletta.

Winnebago has facilities in Iowa, Indiana, Minnesota and Florida.

Another Beat in the Fiscal Second Quarter

On Mar 23, Winnebago reported its fiscal second quarter results and beat on the Zacks Consensus Estimate by $0.08. Earnings were $3.14 compared to the Zacks Consensus Estimate of $3.06.

It has beat on earnings 8 quarters in a row and has missed only twice in the last 5 years. That's an incredible earnings surprise record given the pandemic.

Revenue rose 38.7% compared to the prior year to $1.2 billion, which matched the record level of the first quarter. Excluding the recently acquired Barletta, revenue was $1.1 billion, up 29.4% year-over-year and 73.3% over the same period of Fiscal 2020, as demand remained strong and the company raised prices.

Gross profit margin was 18.6%, which was equal to the prior quarter, and was driven primarily by pricing ahead of the known and anticipated cost input inflation, and operating leverage, offset by production inefficiencies due to supply constraints.

The company also had record sales results at recent RV and Marine trade shows which indicates the continued strength in demand.

Analysts Lower Fiscal 2023 Earnings Estimates

Winnebago was a pandemic winner as Americans took to the outdoors when the pandemic hit. Many on Wall Street believed the surge in demand would be over by now. But they have been wrong about demand.

Winnebago is expected to see Fiscal 2022 earnings growth of 45% year-over-year to $12.51 from $8.55 in fiscal 2021.

But analysts expect the slowdown to hit in fiscal 2023, as 2 have lowered their estimates in the last month. The Zacks Consensus Estimate has fallen to $9.15 from $10.01 during that time.

That's an earnings decline of 26.3%.

Will the analysts get the slowdown "right" this time?

Shares are Dirt Cheap

Winnebago shares soared during the pandemic but in 2022, they have fallen 34%. That's considerably worse than the S&P 500 which is down 13.8% over the same time period.

Winnebago shares are now dirt cheap. It trades with a forward P/E of just 3.9.

Winnebago is shareholder friendly and currently pays a dividend, yielding 1.5%.

But investors might want to wait for more clarification on fiscal 2023's earnings outlook before diving in. Shares might not be as cheap as they appear if earnings actually do slide.

Additional content:

Is Guyana the Hottest Oil Exploration Play at the Moment?

With billions of people staying at home and the global economy shrinking, oil demand dropped significantly amid the coronavirus pandemic. Oil markets had been in turmoil and producers throughout the world encountered more challenges than ever.

However, two years after the pandemic-driven epic oil price crash, optimism is back in the sector, with the commodity rallying above $100-a-barrel to multi-year highs. Apart from geopolitical uncertainties amid Russia's military operations in Ukraine, oil's remarkable turnaround has been prompted by a demand spike due to the reopening of economies and a rebound in activity.

Although oil contributes to global warming and other environmental issues, the world will have to continue to rely on fossil fuels due to the rising energy demand. In this context, the regular and timely discovery of resources assumes greater importance, considering the lack of investment in such endeavors over the past few years, plus the pivot to short-cycle (or shale) production.

One of the hottest new sources of oil and gas could be found in the offshore Guyana-Suriname Basin along the north coast of South America. The increasing number of discoveries in recent times provided for the possibility of Guyana becoming a major oil producer.

Per Reuters, energy major Hess Corp. said that additional oil discoveries at a deeper layer offshore Guyana could add billions of barrels to the block's recoverable resources. On Apr 26, Hess announced three discoveries in the Stabroek block, thereby increasing the block's gross discovered recoverable resource estimate to 11-billion barrels.

Multi-billion barrels are remaining on top of the discovered recoverable resources in the block. Guyana's rising production will help Hess increase production at a 10% annual rate. Also, it will help the company avoid making acquisitions to sustain higher dividends to shareholders.

A consortium led by Exxon Mobil Corp. unveiled 11 billion barrels of oil and gas in the country. Hess owns a 30% stake in the consortium, which made more than 30 oil discoveries at a depth of 15,000 feet in the giant Stabroek block. The consortium commenced drilling at 18,000 feet.

ExxonMobil, with a Zacks Rank #2 (Buy), currently has four sanctioned projects off Guyana's coast. Drilled in January 2022, the Fangtooth discovery well could support another production unit. The Guyana projects are ahead of schedule, with ExxonMobil's third planned platform likely to start production at Payara as soon as third-quarter 2023 from 2024 stated earlier.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Guyana is in talks with ExxonMobil to develop a 120-mile offshore gas pipeline. Guyana is trying to build infrastructure, including a gas-fueled power facility, to develop its economy following ExxonMobil's discovery of the world's largest oil reserves last decade. The pipeline would bring the associated gas to land from ExxonMobil's oil production in the Stabroek block.

In May 2022, ExxonMobil awarded a contract to oilfield service major TechnipFMC to proceed with its Yellowtail development in the Stabroek block offshore Guyana. The contract, which is 'significant' per TechnipFMC, is believed to be valued between $75 million and $250 million. It covers six risers, which are capable of withstanding high pressure and high temperature.

TechnipFMC also got the full notice to go ahead with the formerly declared contract for the subsea production system, following ExxonMobil's final investment decision. The large part of the entire contract award will be included in FTI's second-quarter inbound orders.

To conclude, Guyana is in an advantageous position as the world's latest major oil producer. Apart from being commercialized, the country's oil can transform the nation's wealth. The country currently produces more than 340,000 barrels of oil per day.

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