Since October, the common stock of Vail Resorts (NYSE: MTN) has navigated a steady upward slope, nearly doubling in price. Tomorrow's second-quarter earnings report should reveal whether the owner and operator of the venerable Vail, Breckenridge, and Keystone ski facilities, and other lodging and real estate ventures, is geared for new highs; whether it will remain capped near a 52-week stock high; or whether it might begin to cascade down the mountain.
What analysts say:
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Buy, sell, or waffle? Six analysts currently follow Vail Resorts. Four are bullish, one isn't, and one is on the fence with a hold rating.
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Revenues. Analysts predict second-quarter sales of $360.7 million, for almost 6% growth year over year.
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Earnings. Analysts project second-quarter earnings of $1.99 per share, nearly 14% more than last year's $1.75.
What management says:
As part of the second-quarter earnings release, management guided fiscal 2007 net income to a $55 million-$63 million range, including stock-based compensation expense. Additionally, since running ski resorts is very capital-intensive, Vail Resorts reports high levels of annual depreciation and amortization expense, and it also holds a fair amount of debt on the balance sheet. As such, it provided the following EBITDA guidance:
- Mountain: $193 million-$201 million
- Lodging: $16 million-$21 million
- Real estate: $0-($5 million)
What management does:
Vail Resorts has posted double-digit sales growth over the past few years. Cash flow generation has been even stronger, although reported net income trends have become more uneven given the high fixed costs of running resorts. Fellow Fool Emil Lee recently highlighted Vail's scalable business model, in which skier ticket sales increasingly benefit the bottom line once fixed costs are covered. Indeed, the company has increased ticket and other concession sales at its resorts in recent years, which has boosted profit trends.
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
Judging by its recent stellar stock run, Vail's recent success is no longer a secret. However, it could have further room to run. The company owns some the most highly regarded ski resorts in the country, and it's continually looking to acquire resorts geared toward the summer operating season. Over time, this could diversify sales and decrease exposure to the all-important winter months. But for the time being, 74% of fiscal 2006 sales stemmed from the company's mountain lodges and skiing lift tickets.
Investing in Vail Resorts is also one of the few ways Fools can capitalize on the growing popularity of skiing and other winter sports. Competing resort operators include Gaylord Entertainment (NYSE: GET), as well as those in the gambling-related field, such as Wynn Resorts (Nasdaq: WYNN), Las Vegas Sands (NYSE: LVS), or Harrah's Entertainment (NYSE: HET). But few can lay claim to capitalizing on snow-related activities.
Shop the aisles for more related Foolishness:
Vail Resorts is a Motley Fool Hidden Gems recommendation. Read more about the company, and join Tom Gardner and other investors like you on the discussion boards, with a free 30-day trial of the newsletter.
Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
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