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Here's Why You Should Retain Vail Resorts (MTN) Stock Now
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Vail Resorts, Inc. (MTN - Free Report) is likely to benefit from a solid season pass program, acquisition initiatives and investments in expansion projects. However, high labor costs are a concern.
Let us discuss the factors that suggest investors should retain the stock for the time being.
Growth Catalysts
Vail Resorts has been witnessing solid season pass sales for the upcoming 2022/2023 North American ski season. Season-to-date (through Dec 5), the company stated that pass product sales had increased approximately 6% in units and approximately 6% in sales dollars compared with the prior-year period’s (through Dec 6, 2021) levels. The company reported strong unit growth related to its renewing pass holders in destination markets. Also, it stated benefits from a 7.5% price increase (relative to the 2021/2022 season). The company witnessed solid demand and visitation at its Australian resorts. MTN announced that season pass units rose approximately 86% in units and approximately 53% in sales dollars compared with sales for the 2019/2020 season (through Dec 9, 2019). Robust unit growth was primarily driven by renewing pass holders and significantly stronger unit growth from new pass holders.
Vail Resorts focuses on acquisition initiatives to drive growth. On Mar 28, 2022, the company entered an agreement to acquire a 55% stake in Andermatt-Sedrun Sport AG, a destination ski resort in Central Switzerland. This marks the company's first strategic investment for operating in Europe. Per the agreement, Vail Resorts will be provided access to the resort's mountain and ski-related assets, including lifts, restaurants and a ski school operation. The company anticipates the partnership to drive growth from investments in the resort (CHF 110 million), development in the base area (CHF 39 million) and the resort’s inclusion in the Epic Pass products. It anticipates the initiative to generate more than CHF 5 million EBITDA in the fiscal year ending Jul 31, 2024.
The company continues to reinvest in its resorts to boost customer traffic. For fiscal 2023, the company set aside $180-$185 million to increase lift capacity and enhance the guest experience. The plan includes the installation of new or replacement lifts at Breckenridge, Northstar (NSTR), Heavenly, Stowe, Mount Snow, Attitash, Jack Frost, Big Boulder, Boston Mills and Brandywine. Also, the company intends to upgrade and expand Sedrun’s snowmaking to enhance the experience for key intermediate terrain. The company anticipates the projects to be completed in time for the 2023/2024 European ski season. However, Vail Resorts stated that developments are subject to regulatory approvals.
Image Source: Zacks Investment Research
In the past three months, shares of the company have gained 14.9% compared with the industry’s 5.1% growth.
Concerns
The company’s margins have been bearing the brunt of inflationary labor costs. In the fiscal first quarter, the company’s margins were affected by inflationary labor costs. In the quarter, labor-related costs increased 33.5%, primarily due to increased staffing associated with improved North American operations, owing to fewer COVID-19-related limitations and restrictions and improved demand on a year-over-year basis. The company stated that it increased focus on hiring, retention and talent development for supporting business operations in the upcoming periods. For fiscal 2023, the company anticipates labor expenses, including inflationary adjustments, to be more than $175 million from fiscal 2022 levels.
Hilton Grand Vacations currently has a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 3.7%, on average. The stock has declined 18.2% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and earnings per share (EPS) indicates a rise of 4.7% and 24.6%, respectively, from the year-ago period’s levels.
RCI Hospitality currently has a Zacks Rank #2 (Buy). RICK has a trailing four-quarter earnings surprise of 6.1%, on average. The stock has gained 33.6% in the past year.
The Zacks Consensus Estimate for RICK’s 2023 sales and EPS indicates growth of 12.7% and 10.6%, respectively, from the year-ago period’s reported levels.
Hyatt currently has a Zacks Rank #2. H has a trailing four-quarter earnings surprise of 652.3%, on average. The stock has increased 6.5% in the past year.
The Zacks Consensus Estimate for H’s 2023 sales and EPS indicates a surge of 7.4% and 130.8%, respectively, from the year-ago period’s reported levels.
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Here's Why You Should Retain Vail Resorts (MTN) Stock Now
Vail Resorts, Inc. (MTN - Free Report) is likely to benefit from a solid season pass program, acquisition initiatives and investments in expansion projects. However, high labor costs are a concern.
Let us discuss the factors that suggest investors should retain the stock for the time being.
Growth Catalysts
Vail Resorts has been witnessing solid season pass sales for the upcoming 2022/2023 North American ski season. Season-to-date (through Dec 5), the company stated that pass product sales had increased approximately 6% in units and approximately 6% in sales dollars compared with the prior-year period’s (through Dec 6, 2021) levels. The company reported strong unit growth related to its renewing pass holders in destination markets. Also, it stated benefits from a 7.5% price increase (relative to the 2021/2022 season). The company witnessed solid demand and visitation at its Australian resorts. MTN announced that season pass units rose approximately 86% in units and approximately 53% in sales dollars compared with sales for the 2019/2020 season (through Dec 9, 2019). Robust unit growth was primarily driven by renewing pass holders and significantly stronger unit growth from new pass holders.
Vail Resorts focuses on acquisition initiatives to drive growth. On Mar 28, 2022, the company entered an agreement to acquire a 55% stake in Andermatt-Sedrun Sport AG, a destination ski resort in Central Switzerland. This marks the company's first strategic investment for operating in Europe. Per the agreement, Vail Resorts will be provided access to the resort's mountain and ski-related assets, including lifts, restaurants and a ski school operation. The company anticipates the partnership to drive growth from investments in the resort (CHF 110 million), development in the base area (CHF 39 million) and the resort’s inclusion in the Epic Pass products. It anticipates the initiative to generate more than CHF 5 million EBITDA in the fiscal year ending Jul 31, 2024.
The company continues to reinvest in its resorts to boost customer traffic. For fiscal 2023, the company set aside $180-$185 million to increase lift capacity and enhance the guest experience. The plan includes the installation of new or replacement lifts at Breckenridge, Northstar (NSTR), Heavenly, Stowe, Mount Snow, Attitash, Jack Frost, Big Boulder, Boston Mills and Brandywine. Also, the company intends to upgrade and expand Sedrun’s snowmaking to enhance the experience for key intermediate terrain. The company anticipates the projects to be completed in time for the 2023/2024 European ski season. However, Vail Resorts stated that developments are subject to regulatory approvals.
Image Source: Zacks Investment Research
In the past three months, shares of the company have gained 14.9% compared with the industry’s 5.1% growth.
Concerns
The company’s margins have been bearing the brunt of inflationary labor costs. In the fiscal first quarter, the company’s margins were affected by inflationary labor costs. In the quarter, labor-related costs increased 33.5%, primarily due to increased staffing associated with improved North American operations, owing to fewer COVID-19-related limitations and restrictions and improved demand on a year-over-year basis. The company stated that it increased focus on hiring, retention and talent development for supporting business operations in the upcoming periods. For fiscal 2023, the company anticipates labor expenses, including inflationary adjustments, to be more than $175 million from fiscal 2022 levels.
Zacks Rank & Key Picks
Vail Resorts currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Hilton Grand Vacations Inc. (HGV - Free Report) , RCI Hospitality Holdings, Inc. (RICK - Free Report) and Hyatt Hotels Corporation (H - Free Report) .
Hilton Grand Vacations currently has a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 3.7%, on average. The stock has declined 18.2% in the past year.
The Zacks Consensus Estimate for HGV’s 2023 sales and earnings per share (EPS) indicates a rise of 4.7% and 24.6%, respectively, from the year-ago period’s levels.
RCI Hospitality currently has a Zacks Rank #2 (Buy). RICK has a trailing four-quarter earnings surprise of 6.1%, on average. The stock has gained 33.6% in the past year.
The Zacks Consensus Estimate for RICK’s 2023 sales and EPS indicates growth of 12.7% and 10.6%, respectively, from the year-ago period’s reported levels.
Hyatt currently has a Zacks Rank #2. H has a trailing four-quarter earnings surprise of 652.3%, on average. The stock has increased 6.5% in the past year.
The Zacks Consensus Estimate for H’s 2023 sales and EPS indicates a surge of 7.4% and 130.8%, respectively, from the year-ago period’s reported levels.