Key Stats for Vail Resorts, Inc.
Well, let's join them lucky folks on the slopes, virtually, or maybe profit from their enjoyment?
| Ticker | MTN |
|---|---|
| Sector | Adventure Sports Facilities & Ski Resorts |
| Latest price | $174.20 |
| Value | $6,960M |
| Daily vol | $58M |
| Date | 04 February 2017 |
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Description
Vail Resorts, Inc. operates through three segments: Mountain, Lodging and Real Estate.
- Its Mountain segment operates over 10 mountain resort properties and approximately three urban ski areas, as well as ancillary services, primarily including, ski school, dining, and retail/rental operations. It operates mountain resorts and urban ski areas, such as Whistler Blackcomb in British Columbia, Canada.
- In the Lodging segment, it owns and/or manages a collection of luxury hotels and condominiums under its RockResorts brand, as well as other lodging properties and various condominiums; National Park Service (NPS) concessionaire properties, including the Grand Teton Lodge Company (GTLC), which operates destination resorts in Grand Teton National Park; Colorado Mountain Express (CME), and mountain resort golf courses.
- Its Real Estate segment owns, develops and sells real estate in and around its resort communities.
Though as you might expect 80%+ of revenues is from the ski resorts.
The Industry?
It's worth looking at the industry overall, to see just how strong a position Vail has.
There are approximately 760 ski areas in North America and approximately 460 in the U.S., ranging from small ski area operations that service day skiers to large resorts that attract both day skiers and destination resort guests looking for a comprehensive vacation experience. One of the primary ski industry statistics for measuring performance is “skier visit,” which represents a person utilizing a ticket or pass to access a mountain resort for any part of one day during a winter ski season, and includes both paid and complimentary access. During the 2015/2016 U.S. ski season, combined skier visits for all ski areas in the U.S. were approximately 52.8 million and all North American skier visits were approximately 68.6 million. Our U.S. mountain resorts and urban ski areas had approximately 9.3 million skier visits during the 2015/2016 ski season, or approximately 17.6% of U.S. skier visits, and approximately 13.6% of North American skier visits.
And as you'd expect, it's a pretty seasonable business. Imagine, employees rise at Vail from 5k to 27k during peak season.
Recent financials
Both top and bottom line have been exceptionally strong these last 5 years. Though acquisitions have helped drive the results.
| July-end | 2016A | 2015A | 2014A | 2013A | 2012A |
|---|---|---|---|---|---|
| Revenue | $1.3bn | $1.1bn | $1.0bn | $0.9bn | $0.8bn |
| EPS | $4.01 | $3.07 | $0.77 | $1.03 | $0.45 |
And that dynamic isn't changing as they bought Canada's Whistler for $1.1bn in Oct 2016.
Competition
For skiing, sure there is competition between resorts, but there seems to be no new large resorts being built. Plus, once you've established a resort the aim in to increase revenue per visit and number of visits per person. Okay, there's chance you might holiday in the Caribbean instead, but it's unlikely. Plus the summer season is a growth opportunity.
From a peers perspective, there are only 2 tiny listed ski resorts, and Vail's clearly got better margins. So for good measure I've thrown in a few theme parks. Who've all got similar $1bn plus sales but remarkably better margins and returns.
| Companies | Latest Sales | Operating Profit | Return on Equity |
|---|---|---|---|
| Vail Resorts, Inc. | $1,605M | 27% | 14% |
| Intrawest Resorts Holdings Inc | $582M | 19% | 29% |
| Peak Resorts Inc | $100M | 15% | -9% |
| Six Flags Entertainment Corp | $1,298M | 32% | 166% |
| Cedar Fair, L.P. | $1,264M | 35% | 138% |
| SeaWorld Entertainment Inc | $1,345M | 20% | -2% |
How come Six Flags leaves Vail in the dust? Anyone?
Cash / Debt?
Vail Resorts, Inc. has $1,304M of net debt. That is 3x it's latest operating profit. Though that's after the deal to buy Whistler, so I suspect this figure will come down reasonably.
Wall Street thinks?
The professionals on Wall Street have a $184.71 for Vail Resorts, Inc. and their recommendation to clients is Buy. That implies an upside of 6% to their target. Hardly enticing.
Valuation
At 34x earnings it feels like it's a premium price. Sure this is a great business, potential consolidation, no new entrants, ability to expand sales in summer months, but hasn't that been priced in?
| View Peers | Valuation | Forecast PE | Long-term Growth | Dividend Yield | FCF Yield |
|---|---|---|---|---|---|
| MTN | $6,960M | 34x | 25% | 2% | 7% |
| SNOW.K | $879M | 62x | N/A | 0% | 13% |
| SKIS.O | $79M | 22x | N/A | 0% | 6% |
| SIX | $5,587M | 48x | 8% | 4% | 8% |
| FUN | $3,493M | 19x | 6% | 5% | 14% |
| SEAS.K | $1,629M | 60x | 10% | 3% | 16% |
In fact, it's hard to see where the easy money is in this peer group :(
Dividends
Vail Resorts, Inc. is forecast to pay a dividend of $3.34 per share, compared with a historic dividend of $3.05 per share. That is a 10% growth. And despite the big deal for Whistler, the forecast dividend of $3.34 compares favorably to a forecast EPS of $5.12.
Catalysts
In the last 3 months the stock price has moved by 10% that compares with a change in the earnings forecasts of -2%. In the last 2 years the stocks traded between 28 and 36x earnings. So feels like we are at the high end of the range
On the management team's latest call with Wall Street brokers in early December they said:
season pass sales are up approximately 16% in units and approximately 20% in sales dollar
And they thought conditions looked good for the season.
But the stock's tripled in 3 years... just feels like we are too late to the story :(
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Disclosure: I have no position in any of the stocks mentioned. However I may initiate a position within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Reddit, moderators, and the author do not advise making investment decisions based on discussion in these posts. Analysis is not subject to validation and users take action at their own risk.
Author notes: u/shane_stockflare works at a financial website, Stockflare, and is a Chartered Financial Analyst.
Submitted February 04, 2017 at 04:17PM by shane_stockflare http://ift.tt/2jPgx7W
