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Why Is Vail Resorts (MTN) Down 4.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Vail Resorts (MTN - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

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

Vail Resorts Q1 Earnings & Revenues Miss Estimates

Vail Resorts reported first-quarter fiscal 2021 results, wherein both the top and bottom lines not only missed the Zacks Consensus Estimate but also declined on a year-over-year basis.

In the quarter under review, the company’s reported loss of $3.63 per share, which was wider than the Zacks Consensus Estimate of a loss of $3.59. In the prior-year quarter, the company had reported a loss of $2.23 per share.

Quarterly revenues were $131.8 million, which lagged the consensus mark of $140 million. Moreover, the top line fell 50.8% on a year-over-year basis. The downside was due to dismal performance by the Mountain segment and Lodging segments.

Segment Results

Vail Resorts generates revenues from two segments — Resort (99.8% to net revenues in first-quarter fiscal 2021) and Real Estate (0.2%). Under the Resort segment, the company has Mountain and Lodging services, and other (contributing 80% to net revenues in the fiscal first quarter), and Mountain and Lodging retail and dining (20%).

Meanwhile, Vail Resorts has two reporting segments — Mountain and Lodging.

The Mountain segment reported revenues of $94.7 million in the quarter under review, down 47.6% year over year due to lower visitation associated with the closure of its North American destination mountain resorts and Australian ski areas on account of the COVID-19 outbreak. This was partially offset by $15.4 million courtesy of lift revenues related to the expiration of the Credit Offer.

The segment’s EBITDA amounted to ($87.4) million, compared with a loss of $80 million in the prior-year quarter. Meanwhile, operating expenses at the Mountain segment totaled $186.1 million, down 29% year over year.

Lodging net revenues in the reported quarter were $35.6 million, down 55.2% year over year primarily due to operational restrictions of North American lodging properties as a result of the pandemic. Under the segment, EBITDA declined to ($7.4) million from the prior-year quarter figure of $3.3 million.

Meanwhile, operating expenses at the Lodging segment contracted 44.4% year over year to $44.2 million.

Operating Results

Vail Resorts reported adjusted EBITDA of ($96) million in the quarter under review compared with ($77.6) million in the prior-year quarter. The decline was primarily due to negative impact of the coronavirus pandemic.

Resort operating expenses totaled $230.3 million, down 33.6% year over year. Meanwhile, total segmental operating expenses contracted 33.2% year over year to $231.7 million.

Balance Sheet

Cash and cash equivalents as of Oct 31, 2020, totaled $462.2 million, up from $136.3 million in the year-ago period.

Net long-term debt amounted to $2,387.9 million at the end of the quarter, up from $2,005 million at the end of the prior-year quarter.

As of Nov 30, 2020, the company had total cash and revolver availability of approximately $1.2 billion. This includes $614 million of cash in hand, $419 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $169 million of revolver availability under the Whistler Credit Agreement.

Nonetheless, the company stated that it has sufficient liquidity to fund its operations for up to 2021/22 ski season, even if resort shutdowns are extended.

Fiscal 2021 Guidance

The company has refrained from providing the fiscal 2021 guidance citing uncertainties related to the coronavirus pandemic.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -23.76% due to these changes.

VGM Scores

Currently, Vail Resorts has an average Growth Score of C, 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 F. 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. Notably, Vail Resorts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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