Vail Resorts (MTN) Up 2.7% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Vail Resorts (MTN). Shares have added about 2.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Vail Resorts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Vail Resorts Q2 Earnings & Revenues Miss Estimates

Vail Resorts reported dismal second-quarter fiscal 2024 results, wherein earnings and net revenues missed the Zacks Consensus Estimate. The top line declined but the bottom line grew year over year.

The company’s performance was negatively impacted by weather-related challenges comprising low snowfall across its western North American resorts and moderate snowfall and variable temperatures at the Eastern U.S. resorts (including the Midwest, Mid-Atlantic and Northeast). This challenging weather condition resulted in a notable decline in guest visitation, thus affecting the top-line growth in the quarter.

Nonetheless, solid contributions from the ski and ride school as well as the dining and rental businesses offset the headwinds mentioned above to some extent. Also, the company’s strategic cost management initiatives aided the bottom line during the quarter.

Earnings & Revenues

In the quarter under review, the company reported earnings of $5.76 per share, which missed the Zacks Consensus Estimate of $6.07 by 5.1%. In the year-ago quarter, the company reported earnings of $5.16 per share.

Quarterly net revenues amounted to $1.08 billion, missing the consensus mark of $1.15 billion. The top line fell 2.2% on a year-over-year basis.

Segment Results

Vail Resorts reports through two segments — Mountain and Lodging.

Mountain: This segment generated net revenues of $1 billion in the quarter under review, down 1.3% year over year. The figure compares with our model’s projection of $1.07 billion. During the quarter, revenues from dining fell 4.4% year over year to $82.1 million. Revenues from retail/rental also declined 14.9% to $136.2 million on a year-over-year basis. That said, revenues from ski school and lift increased year over year by 2.6% and 1.8%, respectively.

The segment’s reported EBITDA amounted to $420.3 million in the fiscal second quarter, up 5.4% from $398.9 million reported in the year-ago quarter. Operating expenses totaled $579.1 million, down 5.8% year over year.

Lodging: Total net revenues of this segment in the reported quarter were $77.8 million, down 3.4% year over year. The figure compares with our projection of $97.1 million. During the fiscal quarter, the segment’s EBITDA was $4.7 million against $(4.1) million reported in the year-ago quarter, portraying a 216.1% growth rate.

During the fiscal second quarter, operating expenses in the segment declined 13.6% year over year to $73.1 million.

Operating Results

Vail Resorts reported consolidated EBITDA of $423.5 million in the quarter, up from $396.9 million reported in the year-ago quarter. Operating expenses totaled $653.8 million compared with $705.6 million reported in the year-ago quarter.

Balance Sheet

Cash and cash equivalents as of Jan 31, 2024, totaled $812.2 million compared with $1.11 billion reported at fiscal 2023 end.

Net long-term debt amounted to $2.72 billion at the end of the fiscal second quarter compared with $2.75 billion at the end of fiscal 2023.

As of Jan 31, 2023, the company had total cash and revolver availability of approximately $1.4 billion. This includes $812 million cash in hand, $409 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $221 million of revolver availability under the Whistler Credit Agreement.

Other Updates

The company reported solid season pass sales for the upcoming 2023/24 North American ski season. Season-to-date (through Mar 3, 2024), the company stated that Pass product revenues increased 8.3% compared with the prior-year period’s (through Mar 5, 2023) levels. Also, it stated benefits from an 8% price increase (relative to the 2022/23 season). Furthermore, MTN reported the launch of season pass sales for the 2024/2025 North American ski season, with an 8% increase in pass prices compared to the prior season's launch price.

The company anticipates solid trends on the back of its non-refundable advance commitment products across 41 North American, Australian and European resorts.

Lowered Fiscal 2024 Guidance

In fiscal 2024, net income (attributable to Vail Resorts) is now estimated in the range of $296-$343 million compared with the prior expected range of $316-$394 million. Resorts reported EBITDA is now expected between $847 million and $889 million, down from the previously expected range of $912-$968 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -5.11% due to these changes.

VGM Scores

Currently, Vail Resorts has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Vail Resorts has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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