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Here's Why You Should Steer Clear of Vail Resorts (MTN) Now
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Vail Resorts, Inc. (MTN - Free Report) has been witnessing strong headwinds from weather-related challenges and reduced visitation levels. Also, woes related to fluctuations in interest rates linger.
The company’s shares have declined 4.4% in the past year against the industry’s 14.6% growth. Let’s look at MTN’s earnings estimate revisions to get a clear picture of what analysts are thinking about the company. Earnings estimates for the fiscal 2024 and 2025 have been revised downward by 13.1% and 6.8%, respectively, in the past 30 days.
Let’s discuss the factors that are likely to impact this Zacks Rank #5 (Strong Sell) company’s growth potential.
Key Concerns
Image Source: Zacks Investment Research
Vail Resorts reported dismal second-quarter fiscal 2024 results, with earnings and net revenues missing the Zacks Consensus Estimate. The company’s performance was negatively impacted by weather-related challenges comprising low snowfall across its western North American resorts and moderate snowfall and variable temperatures at the Eastern U.S. resorts (including the Midwest, Mid-Atlantic and Northeast). This challenging weather condition resulted in a notable decline in guest visitation, thus affecting the top line in the quarter.
Unfavorable conditions across the company's North American resorts have led to reduced visitation levels, falling below both the prior year's statistics and the company's initial expectations based on guest numbers and frequency. Season-to-date visitation until Mar 3, 2024, declined by 9.7% compared to the same period in the fiscal year 2023. Persistent challenging conditions were observed until early March at Whistler Blackcomb and Tahoe resorts. A portion of the decreased visitation is attributed to the challenging conditions experienced during the first half of the season and a shift in visitation patterns.
The company is revising its guidance downward due to underperformance observed season-to-date. In fiscal 2024, net income (attributable to Vail Resorts) is now estimated in the range of $296-$343 million compared with the prior expected range of $316-$394 million. Resorts reported EBITDA is expected between $847 million and $889 million, down from the previously-expected range of $912-$968 million.
The company’s debt service obligations could be influenced by fluctuations in interest rates. Considering exposure of $0.7 billion in variable-rate debt (as of Jan 31, 2024), a 100-basis point alteration in borrowing rates would result in an approximate $7.4 million change in annual interest payments. Annual payments tied to the Canyons Resort transaction financing increase by the greater of CPI less 1%, or 2%. The company maintains vigilance regarding the impacts of elevated or sustained inflation, increasing interest rates, and potential disruptions in financial institutions.
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Trip.com Group Limited (TCOM - Free Report) currently carries a Zacks Rank #2. TCOM has a trailing four-quarter earnings surprise of 53.1%, on average. Shares of TCOM have gained 32.2% in the past year.
The Zacks Consensus Estimate for TCOM’s 2024 sales and EPS indicates a rise of 18.2% and 8%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2 at present. It has a trailing four-quarter earnings surprise of 17.8%, on average. Shares of H have rallied 41.5% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.5% and 27%, respectively, from the year-ago levels.
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Here's Why You Should Steer Clear of Vail Resorts (MTN) Now
Vail Resorts, Inc. (MTN - Free Report) has been witnessing strong headwinds from weather-related challenges and reduced visitation levels. Also, woes related to fluctuations in interest rates linger.
The company’s shares have declined 4.4% in the past year against the industry’s 14.6% growth. Let’s look at MTN’s earnings estimate revisions to get a clear picture of what analysts are thinking about the company. Earnings estimates for the fiscal 2024 and 2025 have been revised downward by 13.1% and 6.8%, respectively, in the past 30 days.
Let’s discuss the factors that are likely to impact this Zacks Rank #5 (Strong Sell) company’s growth potential.
Key Concerns
Image Source: Zacks Investment Research
Vail Resorts reported dismal second-quarter fiscal 2024 results, with earnings and net revenues missing the Zacks Consensus Estimate. The company’s performance was negatively impacted by weather-related challenges comprising low snowfall across its western North American resorts and moderate snowfall and variable temperatures at the Eastern U.S. resorts (including the Midwest, Mid-Atlantic and Northeast). This challenging weather condition resulted in a notable decline in guest visitation, thus affecting the top line in the quarter.
Unfavorable conditions across the company's North American resorts have led to reduced visitation levels, falling below both the prior year's statistics and the company's initial expectations based on guest numbers and frequency. Season-to-date visitation until Mar 3, 2024, declined by 9.7% compared to the same period in the fiscal year 2023. Persistent challenging conditions were observed until early March at Whistler Blackcomb and Tahoe resorts. A portion of the decreased visitation is attributed to the challenging conditions experienced during the first half of the season and a shift in visitation patterns.
The company is revising its guidance downward due to underperformance observed season-to-date. In fiscal 2024, net income (attributable to Vail Resorts) is now estimated in the range of $296-$343 million compared with the prior expected range of $316-$394 million. Resorts reported EBITDA is expected between $847 million and $889 million, down from the previously-expected range of $912-$968 million.
The company’s debt service obligations could be influenced by fluctuations in interest rates. Considering exposure of $0.7 billion in variable-rate debt (as of Jan 31, 2024), a 100-basis point alteration in borrowing rates would result in an approximate $7.4 million change in annual interest payments. Annual payments tied to the Canyons Resort transaction financing increase by the greater of CPI less 1%, or 2%. The company maintains vigilance regarding the impacts of elevated or sustained inflation, increasing interest rates, and potential disruptions in financial institutions.
Stocks to Consider
Some better-ranked stocks in the Zacks Consumer Discretionary sector include:
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently carries a Zacks Rank #2 (Buy). RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have surged 110% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Trip.com Group Limited (TCOM - Free Report) currently carries a Zacks Rank #2. TCOM has a trailing four-quarter earnings surprise of 53.1%, on average. Shares of TCOM have gained 32.2% in the past year.
The Zacks Consensus Estimate for TCOM’s 2024 sales and EPS indicates a rise of 18.2% and 8%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2 at present. It has a trailing four-quarter earnings surprise of 17.8%, on average. Shares of H have rallied 41.5% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.5% and 27%, respectively, from the year-ago levels.