🏔️ VAIL RESORTS: ANALYSIS 🏔️
Vail Resorts, Inc. [MTN], through its subsidiaries, operates mountain resorts and regional ski areas in the United States. It operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 41 destination mountain resorts and regional ski areas. This segment is also involved in the ancillary activities, including ski school, dining, and retail/rental operations, as well as real estate brokerage activities. The Lodging segment owns and/or manages various luxury hotels and condominiums, and other lodging properties under the RockResorts brand; various condominiums located in proximity to the company's mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates owned and managed hotel and condominium units. The Real Estate segment owns, develops, and sells real estate properties.
Based on a sample of the last year [3Q/23 TTM], its average margins have been:
- Gross margin: ≈ 45.1%
- Operating margin: ≈ 20.6%
- EBITDA margin: ≈ 29.2%
- Net margin: ≈ 10.6%
Pros:
- Well positioned luxury brand with a business model that is complex to replicate
- Acceptable ROIC/ROE compared to any other in this segment
- Resilience in times of crisis (luxury is more or less stable with little sensitivity to price increases)
Cons:
- Gross, Operating and Net margins decrece in the last year, with slightly elevated net debt, with no dividends this quarter
- Decreases in lodging segment but increased in mountain and school
- Highly dependence of seasonality (fall and winter) and changes in geographical preferences
Based on the last report, their normalized EPS was ≈ $7.02 USD and its last average ROIC [TTM] was ≈ 14.06%. If an average Forward PER 35 is set as a benchmark with an EPS intensity of ± 15.9%, the potential forward spread target could be:
- Optimistic: ≈ $296.7 USD
- Neutral: ≈ $246. USD
- Negative: ≈ $195.3 USD
At least, an EPS of -$3.61 USD is required for the next quarter, to keep the metrics.
In other hand, if an average Forward EV/EBITDA 15 is set, an EBITDA increases of ± 9%, a Net Debt increases of 25%, a Dividends increase of 35.5% and Shares Outstanding increases of 2.66%, the potencial spread price target could be:
- Optimistic: ≈ $271.4 USD
- Neutral: ≈ $253.1 USD
- Negative: ≈ $211.1 USD
Finally, according to i current P/S ration, a possible spread might be at:
- P/S 2: ≈ $151.5 USD
- P/S 5: ≈ $378.8 USD
The best analysis is yours!
M.F. J. Joel Padilla
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