Why Is Vail Resorts (MTN) Down 19.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Vail Resorts (MTN). Shares have lost about 19.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Vail Resorts Reports Q1 Loss

Vail Resorts reported narrower-than-expected results in first-quarter fiscal 2019. Adjusted loss of $2.43 per share was narrower than the Zacks Consensus Estimate of a loss of $2.44. However, it compared unfavorably with the year-ago quarter’s loss of $2. However, on a GAAP basis, the company reported a net loss of $2.66 per share.

Earnings were affected by high operating expenses in Resorts and both the Mountain and Lodging segments.

Quarterly revenues of $220 million missed the consensus mark by 6.3% and declined 0.5% year over year.

Segment Results

Vail Resorts has two reporting segments — Mountain (65.9% in first-quarter fiscal 2019) and Lodging (32.4%).

The Mountain segment reported revenues of $145 million in the quarter, down 2.1% year over year. The revenue decline can be primarily attributed to decrease in the average Australian exchange rate as compared to the prior year.

Under the segment, EBITDA loss was $76.4 million compared with $58.4 million in the prior-year quarter. Operating expenses at the Mountain segment were $222.4 million, up 7.4% year over year.

Lodging net revenues in the reported quarter amounted to $74.9 million, up 3.9% year over year. Lodging revenues were favored by an increase in sales across owned hotel rooms, managed condominium rooms, dining, golf and other, partially offset by a drop in transportation sales.

Under the segment, EBITDA was $3.9 million compared with $4.4 million in the prior-year quarter. Operating expenses at the Lodging segment increased 4.8% year over year to $71 million.

Operating Results

Vail Resorts’ resort reported EBITDA loss was $72.5 million in the reported quarter compared with $54.1 million a year ago.

Resort operating expenses totaled $293.4 million, up 6.8% year over year.

Total segment operating expenses increased 6.6% year over year to $294.7 million.

Balance Sheet

Cash and cash equivalents as of Oct 31, 2018, came in at $141 million compared with $140.4 million as of Oct 31, 2017.

Net long-term debt as of Oct 31, 2018, was $1,486.9 million compared with $1,262.3 million as of Oct 31, 2017.

The company announced a quarterly cash dividend of $1.47 per share, which will be payable on Jan 10, 2019, to shareholders on record as of Dec 27, 2018.

In the first quarter of fiscal 2019, the company repurchased 197,896 shares at an average price of $252.66 for a total of approximately $50 million.

Fiscal 2019 Guidance

For fiscal 2019, Vail Resorts’ resort reported EBIDTA is estimated at $718-$750 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Vail Resorts has an average Growth Score of C, a grade with the same score on the momentum front. 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. Notably, Vail Resorts has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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