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Vail Resorts (MTN - Free Report) is a Zacks Rank #5 (Strong Sell) that operates forty-one mountain resorts and regional ski areas. Some of the notable ones include Vail, Breckenridge, Park City, and Whistler Blackcomb. The company continues to expand its portfolio through acquisitions and investments in various ski destinations.
Unfortunately for investors, the stock continues to slide down an icy slope. Earnings are continually disappointing, which has taken the stock over 50% lower from its 2021 highs. After another poor quarter, the stock is trading near 2024 lows and down 20% on the year.
Is it time to hang up the skis, or is there a relief coming as the winter season starts?
About the Company
Vail Resorts was founded in 1962 and is based in Broomfield, CO. The company employs over 7,600people and operates through three segments: Mountain, Lodging, and Real Estate.
The Mountain segment was 88% of 2024 revenue, while Lodging was close to 12% and Real Estate was 0.2%.
MTN is valued at $6.5 billion and has a Forward PE of 24. The stock holds Zacks Style Scores of “F” in Growth, and “D” in both Momentum and Value. The stock pays a dividend yield of 5%.
Q2 Earnings
The company reported in late September, seeing a 9% EPS miss. Revenues beat and the board authorized a stock buyback, but this was the eight straight miss of earnings expectations.
RevPAR was lower by 3% from last year and total skiers were down 19.4% from last year. This led to a Total Reported EBITDA of -$115.87M, up from a -$87.9M last year.
The company announced a two-year resource efficiency transformation plan including scaled operations, global shared services, and expanded workforce management to create organizational effectiveness and scale for operating leverage as the Company expands and grows globally. Vail expects to achieve $100 million in annualized savings by the end of fiscal 2026 before one-time costs, with approximately $27 million realized in fiscal 2025 before $15 million of one-time costs.
While cost efficiency always helps the bottom line, demand seems to be an issue. While renewing passholders showed growth, skiers visitation declined 9.5% due to unfavorable conditions. Snowfall at Western resorts decreased, while Eastern U.S. resorts faced limited natural snow and variable temperatures.
Earnings Estimates
Looking at estimates, analysts have been cutting numbers across the board.
For next quarter, there has been a drop of 6.5% over the last 30 days, with estimates falling from $7.01 to $6.60.
For the current year, estimates have dropped from $8.57 to $7.31, or 15% over that same time frame.
Next year shows that the trend lower will continue. Since EPS, earnings estimates have dropped from $9.25 to $8.42, a move lower of 9%.
As analysts drop estimates, their price targets are starting to fall. Stifel took their targets to $223 from $259 and Morgan Stanely cut to $179 from $229.
Technical Take
Some investors might remember MTN as one of the biggest victims of COVID, with the stock crashing during the pandemic. However, once everything started to open, a ski trip was on the checklist of many as a way to live their lives again.
The stock made a high of $376.24 in late 2021, but then started missing earnings expectations. Since then, the stock has fallen off a cliff, down over 50%.
The 5% dividend is likely supporting the stock at $170, but if the winter season looks warm again, there could be more pressure on the stock. A move down to $160 area would test the pre-breakout consolation area that we saw way back in 2016.
If we get serious selling, bargain hunters could look at the COVID low was $125, which would be an extreme place of interest for long-term investors.
Looking at moving averages, there is upside resistance that can be found at the 50-day MA at $178. The 200-day resides at $198.
In Summary
Vail Resorts (MTN - Free Report) faces significant challenges as it currently holds a Zacks Rank #5 (Strong Sell). With the stock down over 50% from its 2021 highs and near 2024 lows, concerns over disappointing earnings and declining skier visitation loom large.
While the company is implementing a resource efficiency plan to achieve cost savings, demand remains a critical issue, leading analysts to cut earnings estimates. The 5% dividend yield may provide some support, but warmer winter weather could increase selling pressure, potentially testing the $160 level.
For those interested in the Leisure and Recreation space, a better option might be Carnival (CCL - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is trading at 2024 highs.
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Bear of the Day: Vail Resorts (MTN)
Vail Resorts (MTN - Free Report) is a Zacks Rank #5 (Strong Sell) that operates forty-one mountain resorts and regional ski areas. Some of the notable ones include Vail, Breckenridge, Park City, and Whistler Blackcomb. The company continues to expand its portfolio through acquisitions and investments in various ski destinations.
Unfortunately for investors, the stock continues to slide down an icy slope. Earnings are continually disappointing, which has taken the stock over 50% lower from its 2021 highs. After another poor quarter, the stock is trading near 2024 lows and down 20% on the year.
Is it time to hang up the skis, or is there a relief coming as the winter season starts?
About the Company
Vail Resorts was founded in 1962 and is based in Broomfield, CO. The company employs over 7,600people and operates through three segments: Mountain, Lodging, and Real Estate.
The Mountain segment was 88% of 2024 revenue, while Lodging was close to 12% and Real Estate was 0.2%.
MTN is valued at $6.5 billion and has a Forward PE of 24. The stock holds Zacks Style Scores of “F” in Growth, and “D” in both Momentum and Value. The stock pays a dividend yield of 5%.
Q2 Earnings
The company reported in late September, seeing a 9% EPS miss. Revenues beat and the board authorized a stock buyback, but this was the eight straight miss of earnings expectations.
RevPAR was lower by 3% from last year and total skiers were down 19.4% from last year. This led to a Total Reported EBITDA of -$115.87M, up from a -$87.9M last year.
The company announced a two-year resource efficiency transformation plan including scaled operations, global shared services, and expanded workforce management to create organizational effectiveness and scale for operating leverage as the Company expands and grows globally. Vail expects to achieve $100 million in annualized savings by the end of fiscal 2026 before one-time costs, with approximately $27 million realized in fiscal 2025 before $15 million of one-time costs.
While cost efficiency always helps the bottom line, demand seems to be an issue. While renewing passholders showed growth, skiers visitation declined 9.5% due to unfavorable conditions. Snowfall at Western resorts decreased, while Eastern U.S. resorts faced limited natural snow and variable temperatures.
Earnings Estimates
Looking at estimates, analysts have been cutting numbers across the board.
For next quarter, there has been a drop of 6.5% over the last 30 days, with estimates falling from $7.01 to $6.60.
For the current year, estimates have dropped from $8.57 to $7.31, or 15% over that same time frame.
Next year shows that the trend lower will continue. Since EPS, earnings estimates have dropped from $9.25 to $8.42, a move lower of 9%.
As analysts drop estimates, their price targets are starting to fall. Stifel took their targets to $223 from $259 and Morgan Stanely cut to $179 from $229.
Technical Take
Some investors might remember MTN as one of the biggest victims of COVID, with the stock crashing during the pandemic. However, once everything started to open, a ski trip was on the checklist of many as a way to live their lives again.
The stock made a high of $376.24 in late 2021, but then started missing earnings expectations. Since then, the stock has fallen off a cliff, down over 50%.
The 5% dividend is likely supporting the stock at $170, but if the winter season looks warm again, there could be more pressure on the stock. A move down to $160 area would test the pre-breakout consolation area that we saw way back in 2016.
If we get serious selling, bargain hunters could look at the COVID low was $125, which would be an extreme place of interest for long-term investors.
Looking at moving averages, there is upside resistance that can be found at the 50-day MA at $178. The 200-day resides at $198.
In Summary
Vail Resorts (MTN - Free Report) faces significant challenges as it currently holds a Zacks Rank #5 (Strong Sell). With the stock down over 50% from its 2021 highs and near 2024 lows, concerns over disappointing earnings and declining skier visitation loom large.
While the company is implementing a resource efficiency plan to achieve cost savings, demand remains a critical issue, leading analysts to cut earnings estimates. The 5% dividend yield may provide some support, but warmer winter weather could increase selling pressure, potentially testing the $160 level.
For those interested in the Leisure and Recreation space, a better option might be Carnival (CCL - Free Report) . The stock is a Zacks Rank #1 (Strong Buy) that is trading at 2024 highs.