Free Annual Reports
Vail Resorts Sees A Short-Term Lift
Ski-resort operator Vail Resorts (NYSE:MTN) owns a handful of one-of-a-kind mountain assets and real estate. Strong third quarter results were indicative of the earnings potential from its operations, but the stock valuation and high costs to run its operations could end up snowballing investors.
IN PICTURES: How To Make Your First $1 Million
Third Quarter Sales and Profit Trends
Total net revenue improved 5% to $350.3 million, as revenue in the Mountain segment, which is the company's largest and contains the flagship ski resorts including Vail, Breckenridge, and Keystone, grew 8.3%. The other two units are resorts and real estate that consist of investments in other hotel resorts and properties. Lodging posted flat revenue while real estate experienced a dramatic 66.4% top line decline, though fortunately accounted for less than 1% of total revenue.
Total net income improved 17.9%, to $1.98 per diluted share. This was again led by the Mountain segment as the other two units posted declines in profitability. Management said it was pleased to see improved traffic trends at its resorts and subsequent ski-admission revenue and the related dining and entertainment spending revenue from resort guests.
Guidance
Vail stopped short of offering specific forward guidance, but did detail that full-year ski season traffic is trending slowly and it will likely not meet the higher end of analyst guidance. Currently, analysts expect a full-year revenue decline of 11.5% to $864.6 million and earnings of 85 cents per share, which would be down markedly from last year's $1.33 in per share earnings.
The Bottom Line
Despite the economic moat that goes with owning leading ski resorts in the country, Vail Resorts does not stand out for its investment appeal. Running resorts is very capital intensive, as demonstrated by capital expenditures that soak up nearly all of the operating cash flow that the company generates each year. As such, overall profit margins are minuscule, and though debt levels aren't that lofty, any future development would have to be funded from outside sources given the vast sums it takes to maintain the existing operations.
Vail Resorts' real estate and business assets are extremely valuable and unique, with little direct competition beyond large casino operators such as MGM Mirage (NYSE:MGM) and Wynn Resorts (Nasdaq:WYNN), or other destination-related rivals such as Cedar Fair (NYSE:FUN) or Gaylord Entertainment (NYSE:GET). But again, with a market capitalization that is more than twice reported book value, the value being places on these assets makes it hard to see significant stock gains for investors anywhere near on the horizon. (Learn more about real estate investments, see: Add Some Real Estate To Your Portfolio).
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Third Quarter Sales and Profit Trends
Total net revenue improved 5% to $350.3 million, as revenue in the Mountain segment, which is the company's largest and contains the flagship ski resorts including Vail, Breckenridge, and Keystone, grew 8.3%. The other two units are resorts and real estate that consist of investments in other hotel resorts and properties. Lodging posted flat revenue while real estate experienced a dramatic 66.4% top line decline, though fortunately accounted for less than 1% of total revenue.
Total net income improved 17.9%, to $1.98 per diluted share. This was again led by the Mountain segment as the other two units posted declines in profitability. Management said it was pleased to see improved traffic trends at its resorts and subsequent ski-admission revenue and the related dining and entertainment spending revenue from resort guests.
Vail stopped short of offering specific forward guidance, but did detail that full-year ski season traffic is trending slowly and it will likely not meet the higher end of analyst guidance. Currently, analysts expect a full-year revenue decline of 11.5% to $864.6 million and earnings of 85 cents per share, which would be down markedly from last year's $1.33 in per share earnings.
The Bottom Line
Despite the economic moat that goes with owning leading ski resorts in the country, Vail Resorts does not stand out for its investment appeal. Running resorts is very capital intensive, as demonstrated by capital expenditures that soak up nearly all of the operating cash flow that the company generates each year. As such, overall profit margins are minuscule, and though debt levels aren't that lofty, any future development would have to be funded from outside sources given the vast sums it takes to maintain the existing operations.
Vail Resorts' real estate and business assets are extremely valuable and unique, with little direct competition beyond large casino operators such as MGM Mirage (NYSE:MGM) and Wynn Resorts (Nasdaq:WYNN), or other destination-related rivals such as Cedar Fair (NYSE:FUN) or Gaylord Entertainment (NYSE:GET). But again, with a market capitalization that is more than twice reported book value, the value being places on these assets makes it hard to see significant stock gains for investors anywhere near on the horizon. (Learn more about real estate investments, see: Add Some Real Estate To Your Portfolio).
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Ryan C. Fuhrmann
Ryan C. Fuhrmann, CFA, has a background in portfolio management, overseeing assets for high-net-worth individuals and covering a broad array of industries from a generalist perspective. An active student of investing, he focuses on communicating his ideas as an investment writer and learning from the financial community. Ryan is also actively involved with the CFA Institute. Feel free to visit his website at www.rationalanalyst.com.
Free Annual Reports
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=f74b0ef9bbde38debb14c75bf5ac512a
