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Bear of the Day: Vail Resorts (MTN)

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Vail Resorts Inc. (MTN - Free Report) is a holding company that operates several big-name luxury ski resorts in 15 states and three countries, including Beaver Creek in Breckenridge, CO; Park City in Utah; Whistler Blackcomb in British Columbia; and Perisher, Falls Creek, and Hotham in Australia.

Q4 Earnings Recap

Vail Resorts missed the Zacks Consensus Estimate on both the top and bottom line, with revenue of $77 million and a net loss of $3.82 per share; revenue was down over 68% year-over-year.

Resort Reported EBITDA fell to $503.3 million in fiscal 2020 million compared to $706.7 million in fiscal 2019.

One bright spot of Vail Resorts’ Q4 report was its current liquidity levels: MTN has $360 million in cash on hand as of August 31 and $593 million in revolving credit facilities.

Season-pass sales (through September 18) are up 18% on a unit basis but down 4% on a dollar basis, and while this shows solid volume, it also reflects the hit from discounts offered for renewing season-pass holders following the spring shutdowns.

Bottom Line

MTN is now a Zacks Rank #5 (Strong Sell).

Seven analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen over four dollars to $0.77 per share; earnings are expected to see a double-digit decline for the current fiscal year

Shares are actually up considerably since the March lows, rising almost 68% and outpacing the S&P 500’s 56+% rebound during the same time frame.

Even though shares have run up over the past few months, Vail Resorts will still have a hard road ahead of it. It’s a travel business, and it won’t be able to fully bounce back until the pandemic subsides and a vaccine is made widely available.

Additionally, the company is losing out on the revenue that’s generated from events like weddings and corporate retreats. Until people feel more comfortable traveling again, Vail Resorts’ profitability will take a hit.

There is one thing working in MTN’s favor: it mainly operates outdoor venues, and activities like skiing should have a much lower risk of contracting Covid-19 compared to indoor entertainment options.

Investors who are interested in adding a travel and leisure stock to their portfolio could consider Camping World (CWH - Free Report) . CWH is a #1 (Strong Buy) on the Zacks Rank, and shares have jumped over 600% since mid-March.

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