Vail Resorts (MTN) Down 15.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Vail Resorts (MTN). Shares have lost about 15.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Vail Resorts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Vail Resorts (MTN) Q2 Earnings & Revenues Miss Estimates

Vail Resorts, Inc. reported second-quarter fiscal 2020 results, with earnings and revenues missing the Zacks Consensus Estimate.

In the quarter under review, the company reported earnings of $5.07 per share that missed the Zacks Consensus Estimate of $5.44. In the year-ago quarter, Vail Resorts had reported adjusted earnings of $5.02 per share.

Quarterly revenues came in at $924.6 million, which missed the consensus mark of $954.1 million. However, the metric increased 8.8% on a year-over-year basis. This upside can be attributed to solid performance of the Mountain and Lodging segments.

Segment Results

Vail Resorts generates revenues from two segments — Resort (contributing 99.9% to net revenues in second-quarter fiscal 2020) and Real Estate (0.1%). Under the Resort segment, the company has Mountain and Lodging services, and other (contributing 81.5% to net revenues in fiscal second quarter), as well as Mountain and Lodging retail and dining (18.5%).

Meanwhile, Vail Resorts has two reporting segments — Mountain and Lodging.

The Mountain segment reported revenues of $845.6 million in the quarter under review, up 9% year over year. The metric was mainly driven by increase in pass product revenues and incremental revenues from Peak Resorts.

The segment’s EBITDA amounted to $373 million compared with $352 million in the prior-year quarter. Operating expenses in the Mountain segment totaled $472.7 million, up 11.5% year over year.

Lodging net revenues in the reported quarter were $78.9 million, up 7.7% year over year on rise in sales from Peak Resort.

Under the segment, EBITDA declined 8% from the prior-year figure to $5.3 million. Operating expenses in the Lodging segment rose 9% year over year to $73.6 million.

Operating Results

Vail Resorts reported EBITDA of $377 million in the quarter under review compared with $356.9 million in the prior-year period.

Resort operating expenses totaled $546.3 million, up 11.1% year over year. Total segmental operating expenses increased 11.1% year over year to $547.8 million.

Balance Sheet

Cash and cash equivalents as of Jan 31, 2020 totaled $126.8 million. Net long-term debt as of Jan 31, 2020 was $1,817.1 million.

Vail Resorts approved a quarterly cash dividend of $1.76 per share of common stock, which is payable on Apr 9, 2020, to its shareholders of record as of Mar 26, 2020.

2020 Outlook

Given uncertainty surrounding the impact of coronavirus on the broader U.S. travel market, the company has withdrawn its previous guidance issued on Jan 17, 2020. In the week ended Mar 8, 2020, the company saw a negative performance compared with the previous week owing to lower destination skier visits. It expects this trend to continue and potentially worsen in the upcoming weeks. For 2020, the company expects adjusted EBITDA to be $20 million, below the midpoint of $778-$818 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -41.98% due to these changes.

VGM Scores

At this time, Vail Resorts has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Vail Resorts has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

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