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Why Is Vail Resorts (MTN) Down 1.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Vail Resorts (MTN - Free Report) . Shares have lost about 1.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Vail Resorts Q3 Earnings & Revenues Beat Estimates

Vail Resorts reported strong third-quarter fiscal 2021 results, wherein both the top and bottom lines not only beat the Zacks Consensus Estimate but also improved year over year.

In the quarter under review, the company’s reported earnings of $6.72 per share, beating the Zacks Consensus Estimate of $6.67. In the prior-year quarter, the company had reported earnings of $3.74 per share.

Quarterly revenues were $889.1 million, which surpassed the consensus mark of $881 million. Moreover, the top line surged 28.1% on a year-over-year basis. The upside can be attributed to robust performance by the Mountain segment and Lodging segments.

The company is benefiting from improving visitation. Excluding Peak Resorts, total visitation at the company’s U.S. destination mountain resorts and regional ski areas declined only 3% during the quarter, compared with the same period of 2019. However, Whistler Blackcomb, which plunged 60% compared with third-quarter 2019, continues to hurt the company.
The company’s RevPAR jumped 39.4% in the quarter, while ADR slumped 19.8%.

Segment Results

Vail Resorts has two reporting segments — Mountain and Lodging.

The Mountain segment reported revenues of $829.2 million in the quarter under review, up 30.5% year over year due to robust North American pass sales growth for the 2020/2021 ski season. The company also benefited from increase in demand at the Colorado and Utah destination resorts. The increase can be attributed to 54.1% rise in lift revenues. Moreover, Ski school and retail/rental revenues rose 5% and 16.8%, respectively.

The segment’s EBITDA amounted to $458 million, up 51.9% from the prior-year quarter. Meanwhile, operating expenses at the Mountain segment totaled $372.2 million, up 11.5% year over year.

Lodging net revenues in the reported quarter were $59.1 million, rose 3.1% year over year primarily due to the company’s full operation for the full U.S. ski season this year. Over the past few quarters results were impacted by coronavirus-induced restrictions. Under the segment, EBITDA increased to $4.2 million from the prior-year quarter figure of $2.9 million.

Meanwhile, operating expenses at the Lodging segment contracted 1.1% year over year to $54.9 million.

Operating Results

Vail Resorts reported adjusted EBITDA of $462.2 million in the quarter under review, up 51.9% year over year. Resort operating expenses totaled $427.1 million, up 9.7% year over year.

Balance Sheet

Cash and cash equivalents as Apr 30, 2021, totaled $1,344.7 million, up from $482.7 million in the year-ago period.

Net long-term debt amounted to $2,740 million at the end of the quarter, up from $2,365.4 million at the end of the prior-year quarter.

As of Apr 30, 2021, the company had total cash and revolver availability of approximately $2 billion. This includes $1.3 billion of cash in hand, $419 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $203 million of revolver availability under the Whistler Credit Agreement.

Fiscal 2021 Guidance

The company provided outlook for fiscal 2021. The company anticipates net income in the range of $93 million to $139 million in fiscal 2021. Resorts reported EBITDA is expected between $530 million and $570 million. Meanwhile, resorts reported EBITDA margin is anticipated to be nearly 28.9%, using the mid-point of the guidance range.    

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -9.71% due to these changes.

VGM Scores

At this time, Vail Resorts has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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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