United Parks & Resorts’ Q1 Earnings: Navigating Headwinds in a Theme Park Landscape

United Parks & Resorts (PRKS) is set to report its Q1 2025 earnings on May 12, a critical moment for investors assessing whether the company can overcome near-term challenges to deliver on its “record year” guidance. With revenue projected to dip 1.2% year-over-year and an EPS loss expected to widen, the results will test management’s narrative of long-term growth amid rising costs and operational hurdles.

Revenue and Earnings: A Mixed Bag of Growth and Strain

Analysts anticipate Q1 revenue of $293.9 million, a slight decline from $297.4 million in 2024. While this reflects weaker attendance—down 2.3% to 3,370 visitors—the company’s focus on boosting per capita spending is paying off. In-park revenue per capita rose to $87.12 from $86.21, driven by higher admissions pricing ($48.42 vs. $48.06) and merchandise/food sales ($39.04 vs. $38.15). However, admissions revenue dipped 1.3%, signaling that attendance struggles are outweighing pricing power in this segment.

The bigger concern lies in earnings. Analysts expect a Q1 EPS loss of $0.23, a 35% deterioration from -$0.17 in 2024. This reflects rising operational costs, including labor and maintenance expenses, which management has flagged as a key challenge. The downward revision in EPS estimates over the past month—by 3.6%—hints at investor skepticism about the company’s ability to contain costs.

Management’s “Record Year” Ambitions vs. Near-Term Headwinds

Despite Q1’s softness, management remains bullish on 2025, citing new attractions, strong group bookings (up double digits), and rising international sales (mid-single-digit growth). These tailwinds could offset the drag from Q1’s weather-related attendance dips and higher expenses. However, the path to profitability hinges on execution.

The company’s balance sheet offers some reassurance: a net leverage ratio of 2.94x and $798.4 million in liquidity as of December 2024 suggest financial flexibility. Yet investors will scrutinize Q1’s operating margins, which were already under pressure in Q3 2024, when EPS missed estimates by $0.15 and revenue fell short of forecasts.

Stock Performance and Analyst Sentiment: Caution Ahead

PRKS shares have lagged the broader market, rising just 2.7% over the past month versus the S&P 500’s 11.3% gain. The stock carries a Zacks Rank #4 (Sell), reflecting concerns about its ability to meet near-term targets. A key question is whether the company’s Q1 results will align with its “record year” narrative or reinforce doubts about its cost controls and attendance trends.

Conclusion: A Test of Resilience in an Expensive Play

United Parks & Resorts faces a pivotal quarter. While its strategy to boost per capita spending and expand attractions shows promise, Q1’s revenue decline and widening EPS loss underscore the fragility of its current trajectory. Investors should watch for two critical signs:

1. Cost Discipline: Can the company rein in expenses without sacrificing guest experience? A narrowing gap between revenue growth and cost inflation would be a positive signal.
2. Attendance Recovery: While Q1’s dip is partly weather-related, sustained weakness in visitor numbers could undermine the “record year” thesis. Management’s guidance on seasonal trends and pricing power will be key.

Given the Zacks Sell rating and the stock’s underperformance, the bar is high. If PRKS can demonstrate that its long-term growth drivers are outweighing short-term headwinds—such as with strong attendance in Q2 and Q3—shares could rebound. However, if costs spiral further or attendance trends worsen, the company may face a prolonged period of underperformance. For now, the market’s patience is thin: the path to profitability must become clearer by May 12.