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Why Vail Resorts Stock Rose 11% in February

By Jeremy Bowman - Updated Apr 12, 2019 at 1:13PM

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Shares of the ski-resort operator gained on continuing expansion, and as it bounced back from concerns about a weak ski season.

What happened

Shares of Vail Resorts (MTN 1.62%) climbed last month as the company expanded through an acquisition, folded new resorts into its Epic Pass, and benefited from healthy snowfall levels in the West. As a result, the stock bounced back from a sell-off in January after the company cut guidance due to a slow start to the ski season; it gained 11% in February, according to data from S&P Global Market Intelligence.

As the chart below shows, the stock rose steadily over the month, putting the January sell-off behind it:

MTN Chart

MTN data by YCharts.

So what

Several factors seemed to restore investor confidence in the stock during February. First, the company said on Feb. 6 that Sun Valley Resort in Idaho and Snowbasin Resort in Utah will join Vail Resorts' Epic Pass, which gives skiers and snowboarders access to more than a dozen mountains with one pass, starting in the 2019-20 season. Those two resorts give Vail Resorts added firepower as it seeks to fend off a challenge from the new Ikon Pass, which includes a number of high-profile mountains including those at Aspen Snowmass.

Check out the latest earnings call transcript for Vail Resorts.

A skier cutting an edge down a mountain

Image source: Vail Resorts.

Later in February, Vail said it would acquire the Falls Creek and Hotham Resorts in Australia for $122.7 million, expanding its presence Down Under.

Finally, investors were encouraged by the impressive snowfalls over February, as the company announced an extended ski season at Lake Tahoe-area resorts Heavenly, Kirkwood, and Northstar, and said that Breckenridge would stay open through May for the first time since the mid-1990s. The extended season helped boost financial results for the year.

Now what

Vail Resorts continued to make news in March: The company first said it would introduce the Epic Day Pass, geared for more casual skiers who plan to ski less than seven days in a year, and then followed that up with a strong second-quarter earnings report. Vail beat earnings estimates in the quarter, raised its dividend by 20%, and restored investor optimism after a rocky start to the ski season.

The stock rose 7% on the news, and is up 6% thus far in March.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Vail Resorts. The Motley Fool has a disclosure policy.

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