Vail Resorts Q3 Preview: EPS Beat in Store?


Vail Resorts MTN is the world’s leading mountain resort company and a leader in destination-based luxury travel to iconic locations. The company operates in three distinct but highly integrated segments: Mountain, Lodging and Real Estate Development.

The mountain segment owns and operates ten world-class mountain resorts and three urban ski areas. Additionally, the mountain segment includes lift tickets, ski and snowboard school, restaurants, retail and rental businesses.

In the lodging segment, the Company owns and operates a portfolio of luxury hotels under the RockResorts brand, several hotels and condominiums located near its ski resorts, three destination resorts at Grand Teton National Park and several award-winning golf courses.

The real estate segment, Vail Resorts Development Company, owns, develops, buys and sells real estate in and around its resort communities.

Heading into its quarterly report on Thursday, Vail Resorts has an ESP score of 4.3% and is a Zacks Rank #3 (Hold). It should be noted that pairing a positive Earnings ESP Score with a Zacks Rank #3 or higher greatly increases the odds of an EPS beat.

Year-to-date, stocks have struggled, losing around 20% in value and underperforming the S&P 500.

Image source: Zacks Investment Research

Stretching the time frame over the past year, we can see that stocks have been struggling for some time now, falling around 18% and underperforming the S&P 500 by a wide margin.

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Image source: Zacks Investment Research

When it comes to previous quarterly performance, EPS beats are fairly common for the company, topping the Zacks Consensus EPS estimate in six of its ten previous quarterly reports. However, MTN reported earnings of $5.47 per share in its latest quarterly report, missing the consensus EPS estimate of $5.70 by 4%.

Overall, quarterly revenue results were mixed. Vail Resorts has beaten top estimates five times in its past ten quarters. Additionally, the company reported worse-than-expected quarterly sales in its latest quarter, missing revenue estimates of $958 million by 5.5%.

Pivoting to valuation, MTN’s forward price-to-sales ratio stands at 4.2X, slightly below the five-year median of 4.3X. Additionally, the value represents a slight 1% premium to the S&P 500 value of 4.1X.

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Image source: Zacks Investment Research

For investors with an appetite for income, MTN has that covered with its annual dividend yield of 2.97% with a payout ratio of 67% of earnings. Over the past five years, the company has raised its dividend three times – no doubt for investor tastes. In addition, the return is well above that of the S&P 500.

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Image source: Zacks Investment Research

Cedar Fair

For investors looking for exposure to the Zacks entertainment and leisure services industry, such as what MTN offers, a solid bet within the industry is Cedar Fair FUN. The company is a Zacks Rank #1 (Strong Buy), and analysts have raised their earnings outlook in all periods over the past 60 days.

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Image source: Zacks Investment Research

In its last four quarters, FUN has acquired a double-digit EPS surprise of 22%, and in its last quarter, the company beat net income estimates by 20%.

Moreover, the background forecasts appear robust. For the quarter ahead, the earnings per share estimate of $1.44 reflects a massive triple-digit growth of 240% in earnings over the prior year quarter. For the current fiscal year, the earnings per share estimate of $4.00 shows a stunning triple-digit growth in net income of 730%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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