Shares of mountain resort giant Vail Resorts, Inc. (NYSE:MTN) are up 36% after adjusting for dividends, according to data provided by S&P Global Market Intelligence, as operations continued to improve during a bad snow year. Positive earnings trends show the power of Vail's business model whether it's a good or bad snow year.
Vail reported a 6% increase in revenue to $1.8 billion in the first three fiscal quarters of 2018 and a 73.2% increase in net income to $463.6 million. Results were positive despite the fact that skier visits were down 1.9% versus a year ago through April 15, 2018.
What Vail has done in the last five years is expand its portfolio, with Whistler and other smaller acquisitions combining to give the company, arguably, the best skiing assets in North America. Vail has turned that position into a business that tries to sell season passes to all of its resorts before the winter season even starts. That reduces the risk of a bad winter (like last year), and as customers get used to buying passes, the company can slowly raise prices. That's how you get revenue growth without skier growth.
I don't think Vail is done expanding its portfolio or leveraging season passes to increase profitability. That's why I believe the stock is still in a good position, despite trading for 29 times trailing earnings. As long as people have discretionary income to spend on the slopes, Vail will be a big winner.