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Vail Resorts' (MTN) Shares Slump on Lowered EBITDA Guidance

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Shares of Vail Resorts, Inc. (MTN - Free Report) dipped nearly 13% at close on Jan 11, after the company reported certain ski season metrics for the comparative periods from the beginning of ski season through Jan 6, 2019.

The company revealed that destination guest visitation was lower than expected in the pre-holiday period, especially in December. Subsequently, it also lowered its full-year guidance for earnings before interest, taxes, depreciation and amortization (EBITDA).

Vail Resorts’ business is highly dependent on weather conditions. Particularly, the ski business directly depends on the amount and timing of snowfall. Unfavorable weather conditions can adversely affect skiers’ visits, and in turn, hurt the company’s revenues and profits. Unseasonably warm weather may also result in inadequate natural snowfall and reduce skiable terrain, which increases costs of snowmaking.

Notably, shares of Vail Resorts have lost 15.7% in the past year compared with the industry’s 17.2% decline.


Inside the Headlines

Vail Resorts reported season-to-date ski season metrics for the company’s North American mountain resorts. Total lift-ticket revenues in the North American mountain resorts were up 12.2% from the last year’s comparable period.

Season-to-date ski school revenues were up 9.5% and dining revenues were up 14.8% year over year. Retail/rental revenues for North American resort store locations increased 12% compared with the prior-year season-to-date period. Total skier visits also moved up 16.9% compared with the prior-year season-to-date period.

Will Vail Resorts Recover From the Setback?

While adverse weather conditions will continue to hurt Vail Resorts’ margins, the company’s benefits stem from its continuous focus on acquisition and a robust season pass program. Vail Resorts has a season pass program, under which the company offers a variety of season pass products for all the mountain resorts and urban ski areas in both domestic and international markets.

In the first quarter of fiscal 2019, North American ski season pass sales increased approximately 21% in units and 13% in sales dollars on a year-over-year basis. Excluding sales of military passes to new purchasers, who were not pass holders in the last year, season pass sales increased approximately 8% in units and 10% in sales dollars over the comparable period. The company witnessed season pass sales increase across all products and geographies, including destination markets.

Meanwhile, Vail Resorts extensively focuses on acquisitions and mergers to build a stronger portfolio of differentiated, and varied services. The company acquired a few mountain resorts, hotel properties and other businesses complementary to its own as well as developable land in proximity to its resorts.Vail Resorts expects these acquisitions to positively contribute to the company’s operating results going ahead.

Zacks Rank & Stocks to Consider

Vail Resorts currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same industry include Cinemark (CNK - Free Report) , Live Nation (LYV - Free Report) and Planet Fitness (PLNT - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Current-year earnings for Live Nation and Planet Fitness are expected to increase 95.8% and 42.9%, respectively. Cinemark’s earnings for 2019 are expected to grow 11.6%.

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