SeaWorld Entertainment, Inc. (SEAS) shares rose more than 17% by late Monday after the company reported better-than-expected second quarter financial results. Despite missing earnings estimates by one cent per share, the aquatic theme park beat revenue estimates by $20.5 million, bringing in $391.9 million in revenue and earnings per share of 26 cents.
Attendance improved by 4.8% to 6.4 million guests during the quarter, which alleviated a key concern among analysts in the sector. Management attributed the growth to a new strategic pricing strategy, as well as new marketing and communications initiates and new rides, attractions and events. The company hopes to reach nearly $500 million in adjusted EBITDA by 2020. Investors are closely watching the company's performance as it seeks to hit these ambitious targets. (See also: How Theme Parks Are Tackling VR, Augmented Reality.)
From a technical standpoint, SeaWorld stock had been in a horizontal price channel with a bearish moving average convergence divergence (MACD) trend since late June. The stock broke out from these levels on Monday to fresh 52-week highs before moving marginally off of those highs throughout the afternoon. The relative strength index (RSI) moved to overbought levels of 72.11, but the MACD could see a bullish crossover.
Traders should watch for some consolidation above R2 resistance at $24.00 given the lofty RSI readings. With the MACD crossover, traders could see an extended move higher following this period of consolidation. If the stock breaks down from R2 resistance, traders could see a move to retest trendline and R2 resistance at around $22.65 to $23.00, although this scenario appears less likely given the bullish breakout. (For additional reading, check out: World's Most Expensive Theme Parks.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.