Vail Resorts

Vail Resorts Inc. ( MTN - Snapshot Report ) has experienced sharp upward revisions in earnings estimates over the past seven days, as an increase in summer guests led to solid fiscal fourth quarter results. The resort operator hit a 52-week high on September 25, the day of its earnings release, and then reached a Zacks #1 Rank (Strong Buy) on September 28.

Fiscal Fourth-Quarter Beat

Vail Resorts reported a fourth quarter fiscal 2012 loss per share of $1.50, narrower than the Zacks Consensus Estimate for a loss of $1.56. In the year-ago quarter, the company lost $1.49.

Total net revenues increased 4.5% year over year to $113.5 million. Net revenue for the Mountain segment jumped 11.3% to $46.4 million, while net sales for the lodging segment inched up 0.7% to $54.8 million. However, net revenue for the real estate segment fell 1.5% to $12.4 million.

The company’s reported Resort EBITDA reflects better performance of the Mountain and Lodging segments, which improved 1.4% year over year, driven by enhanced summer guest visitation.

At the end of the quarter, the liquidity position remained sound with cash in hand of $46.1 million and no borrowing under the revolving senior credit facility. The company has virtually no principal payments due on debt until 2019.

Promising Outlook

Pre-season sales for 2012-2013 Vail Resorts season passes appear strong. For fiscal 2013, the company expects net income in the range of $49.9 million to $59.9 million and Resort EBITDA between $260 million and $270 million, reflecting an upside of 27% to 32% year over year.

Surge in Earnings Estimates

In the past 7 days, the Zacks Consensus Estimate for fiscal 2013 climbed 23.0% to $1.50 per share on the back of upward revisions from seven of nine estimates. The current estimate implies year-over-year growth of 233.8%.

For fiscal 2014, the Zacks Consensus Estimate is $1.86 per share, exhibiting an increase of 31.9% in the last 7 days aided by two upward revisions out of five estimates. The current estimate suggests year-over-year growth of 24.1%.

Premium Valuation

Shares of Vail Resorts currently trade at a premium on a price-to-earnings (P/E) and price-to-sales (P/B) basis. On a forward P/E basis, shares are trading at 38.38x, versus the peer group average of 30.39x. On a P/B basis, shares are trading at 2.55x, versus 2.11x for the peer group average. A healthy earnings growth prospect warrants the premium valuation of the company. Moreover, the company’s long-term estimated earnings per share growth rate remains strong at 16.4%.

Chart Shows Strong Momentum

The stock has been trading above its 50 and 200-day moving averages since June 4, 2012. The widening gap between the stock price line and that of the 50 and 200-day moving average lines show the growing momentum of Vail Resorts.

Volume is fairly strong, averaging roughly 271K daily. The year-to-date return for the stock is 36.1% compared with the S&P 500’s return of 14.7%.

Founded in 1997 and headquartered in Broomfield, Colorado, Vail Resorts is one of the leading mountain resort operators in North America. The company operates in three segments – Mountain, Lodging and Real Estate. With a market capitalization of $2.05 billion, Vail Resorts primarily competes with HomeAway Inc. (AWAY) and Carnival Corporation (CCL).

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