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Here's Why Investors Should Retain Vail Resorts (MTN) Stock
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Vail Resorts, Inc. (MTN - Free Report) is likely to benefit from a robust season pass program and digital initiatives. Also, focus on strategic investments and expansion bodes well. However, increasing labor-related costs and weather-related woes are a concern.
Let us discuss the factors that highlight why investors should retain the stock for now.
Growth Catalysts
Vail Resorts’ season pass program reports solid growth for the 2023/2024 North American ski season. In third-quarter fiscal 2023, the company stated that pass product sales increased 6% in units and 11% in sales dollars compared with the prior-year period’s levels. MTN reported strong unit growth related to its renewing pass holders in destination markets. Also, it stated benefits from an 8% price increase (relative to the 2022/2023 season). The company witnessed solid demand and visitation at its western North American resorts.
The company has been witnessing solid demand with respect to the Australian Ski season. Season to date (through Jun 1, 2023), its Epic Australia Pass sales were up 16% on a year-over-year basis. The passes not only secure reservations for the upcoming winter season in Australia but also establish early commitments from Australian guests for North American ski resorts in the 2023/2024winter season. This positive performance bodes well for Australian and North American winter destinations.
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 Keystone, Whistler Blackcomb, Stevens Pass and Attitash. The company anticipates the projects to be completed in time for the 2023/2024 North American winter season. Also, the company intends to expand parking spaces across Heavenly, Mount Sunapee, Liberty and Roundtop to improve guest experience.
The company focuses on technological enhancements to drive growth. It stated plans to introduce new technology for the 2023/2024 North American ski season that allows guests to store their pass product or lift ticket directly on their phone, eliminating the need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail. Once loaded on their phones, guests can get scanned, hands-free, in the lift line using Bluetooth Low Energy technology.
MTN plans to launch the My Epic app, offering features like Mobile Pass, mobile lift tickets, interactive trail maps, real-time and predictive lift line wait times, personalized statistics, My Epic Gear, and other pertinent information to enhance guest experience. Also, the company is set to introduce My Epic Gear for the 2024/2025 winter season. The My Epic Gear will offer name brand, high-quality ski and snowboard boots with customized insoles and boot fit scanning technology. The company is optimistic in this regard and anticipates the initiatives to drive growth in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of MTN have increased 5.1% in the past year period compared with the industry’s rise of 25%. The company’s performance was affected by increasing labor-related costs and weather-related woes. In third-quarter fiscal 2023, the company’s operations were impacted by significant weather-related challenges from the travel disruptions (during peak holiday period), abnormal weather variability across our Eastern U.S. resorts and storm related disruptions at Tahoe resorts.
The company’s margins have been bearing the brunt of high costs for some time. In the fiscal third quarter, the mountain segment’s labor-related cost increased 15.5% year over year. Operating expenses increased 10.0% from the prior-year quarter’s levels. The upside was primarily driven by investments in wages and salaries for North American employees and incremental expenses associated with Andermatt-Sedrun. For fiscal 2023, the company anticipates labor expenses, including inflationary adjustments, to be more than $175 million.
Zacks Rank & Key Picks
Vail Resorts currently carries a Zacks Rank #3 (Hold).
Royal Caribbean Cruises Ltd. (RCL - Free Report) carries a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have gained 120.8 in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 48.5% and 163%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 148%, on average. Shares of TCOM have increased 83.9% in the past year.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 76.9% and 334.5%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 18.8%, on average. Shares of SKX have increased 46.5% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 7.8% and 31.9%, respectively, from the year-ago period’s levels.
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Here's Why Investors Should Retain Vail Resorts (MTN) Stock
Vail Resorts, Inc. (MTN - Free Report) is likely to benefit from a robust season pass program and digital initiatives. Also, focus on strategic investments and expansion bodes well. However, increasing labor-related costs and weather-related woes are a concern.
Let us discuss the factors that highlight why investors should retain the stock for now.
Growth Catalysts
Vail Resorts’ season pass program reports solid growth for the 2023/2024 North American ski season. In third-quarter fiscal 2023, the company stated that pass product sales increased 6% in units and 11% in sales dollars compared with the prior-year period’s levels. MTN reported strong unit growth related to its renewing pass holders in destination markets. Also, it stated benefits from an 8% price increase (relative to the 2022/2023 season). The company witnessed solid demand and visitation at its western North American resorts.
The company has been witnessing solid demand with respect to the Australian Ski season. Season to date (through Jun 1, 2023), its Epic Australia Pass sales were up 16% on a year-over-year basis. The passes not only secure reservations for the upcoming winter season in Australia but also establish early commitments from Australian guests for North American ski resorts in the 2023/2024winter season. This positive performance bodes well for Australian and North American winter destinations.
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 Keystone, Whistler Blackcomb, Stevens Pass and Attitash. The company anticipates the projects to be completed in time for the 2023/2024 North American winter season. Also, the company intends to expand parking spaces across Heavenly, Mount Sunapee, Liberty and Roundtop to improve guest experience.
The company focuses on technological enhancements to drive growth. It stated plans to introduce new technology for the 2023/2024 North American ski season that allows guests to store their pass product or lift ticket directly on their phone, eliminating the need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail. Once loaded on their phones, guests can get scanned, hands-free, in the lift line using Bluetooth Low Energy technology.
MTN plans to launch the My Epic app, offering features like Mobile Pass, mobile lift tickets, interactive trail maps, real-time and predictive lift line wait times, personalized statistics, My Epic Gear, and other pertinent information to enhance guest experience. Also, the company is set to introduce My Epic Gear for the 2024/2025 winter season. The My Epic Gear will offer name brand, high-quality ski and snowboard boots with customized insoles and boot fit scanning technology. The company is optimistic in this regard and anticipates the initiatives to drive growth in the upcoming periods.
Concerns
Image Source: Zacks Investment Research
Shares of MTN have increased 5.1% in the past year period compared with the industry’s rise of 25%. The company’s performance was affected by increasing labor-related costs and weather-related woes. In third-quarter fiscal 2023, the company’s operations were impacted by significant weather-related challenges from the travel disruptions (during peak holiday period), abnormal weather variability across our Eastern U.S. resorts and storm related disruptions at Tahoe resorts.
The company’s margins have been bearing the brunt of high costs for some time. In the fiscal third quarter, the mountain segment’s labor-related cost increased 15.5% year over year. Operating expenses increased 10.0% from the prior-year quarter’s levels. The upside was primarily driven by investments in wages and salaries for North American employees and incremental expenses associated with Andermatt-Sedrun. For fiscal 2023, the company anticipates labor expenses, including inflationary adjustments, to be more than $175 million.
Zacks Rank & Key Picks
Vail Resorts currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Consumer Discretionary sector are:
Royal Caribbean Cruises Ltd. (RCL - Free Report) carries a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have gained 120.8 in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 48.5% and 163%, respectively, from the year-ago period’s levels.
Trip.com Group Limited (TCOM - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 148%, on average. Shares of TCOM have increased 83.9% in the past year.
The Zacks Consensus Estimate for TCOM’s 2023 sales and EPS indicates a rise of 76.9% and 334.5%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 18.8%, on average. Shares of SKX have increased 46.5% in the past year.
The Zacks Consensus Estimate for SKX’s 2023 sales and EPS indicates a rise of 7.8% and 31.9%, respectively, from the year-ago period’s levels.