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Vail Resorts Q3 Preview: EPS Beat in Store?

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Vail Resorts (MTN - Free Report) is the premier mountain resort company globally and a leader in luxury, destination-based travel at iconic locations. The company operates within three separate 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 ticket, ski and snowboard school, dining, retail, and rental businesses.

Within the lodging segment, the company owns and manages a portfolio of luxury hotels under the RockResorts brand, several hotels and condominiums located in proximity to 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, holds, 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’s worth noting that pairing a positive Earnings ESP Score with a Zacks Rank #3 or higher vastly increases the odds of an EPS beat.

Year-to-date, shares have struggled, declining approximately 20% in value and underperforming the S&P 500.

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Stretching out the time frame over the last year, we can see that shares have struggled for some time now, declining approximately 18% and underperforming the S&P 500 by a wide margin.

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Image Source: Zacks Investment Research

Looking at previous quarterly performance, EPS beats are pretty common for the company, exceeding 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 release, missing the consensus EPS estimate of $5.70 by 4%.

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

Pivoting to valuation, MTN’s forward price-to-sales ratio sits at 4.2X, marginally under the five-year median of 4.3X. Furthermore, the value represents a slight 1% premium relative to the S&P 500’s 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 2.97% annual dividend yield with a payout ratio sitting at 67% of earnings. Over the last five years, the company has increased its dividend three times – undoubtedly to the likes of investors. Additionally, the yield is much higher than that of the S&P 500.

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Image Source: Zacks Investment Research

Cedar Fair

For investors seeking exposure to the Zacks – Leisure and Recreation Services Industry, such as what MTN provides, a solid bet within the industry is Cedar Fair (FUN - Free Report) . The company is a Zacks Rank #1 (Strong Buy), and analysts have been upping their earnings outlook across all timeframes over the last 60 days.

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Image Source: Zacks Investment Research

Over its last four quarters, FUN has acquired an EPS surprise in the double-digits of 22%, and in its latest quarter, the company beat bottom line estimates by a sizable 20%.

Additionally, bottom-line forecasts look robust. For the upcoming quarter, the $1.44 per share earnings estimate reflects a massive triple-digit 240% growth in earnings from the year-ago quarter. For the current fiscal year, the $4.00 per share earnings estimate displays a jaw-dropping triple-digit growth in the bottom line of 730%.


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