Bear of the Day: Vail Resorts (MTN)

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Vail Resorts (MTN) is a Zacks Rank #5 (Strong Sell) that operates mountain resorts and ski areas in the United States. The company owns popular names like Vail, Breckenridge, Keystone, Kirkwood, Park City Resort among others.  

Vail typically sees a steady flow of visitors in its various resorts, but with COVID-19 still around as winter approaches, the stock could be in for some rough terrain.

Overview of Company

The Broomfield, Colorado company was founded in 1997 and has 6,600 employees. MTN has a market cap of almost $9 billion and has a Forward PE of 45. The stock has Zacks Style Scores of “F” in Growth and “D” in Value.

COVID-19 and Mountains

The big issue the company faces is the upcoming winter season and restrictions on travel and lodging. Additionally, the fear that is still in the air surrounding the virus will keep people away from ski resorts, which were thought to be one of the major areas of the original spread.

The Mountain segment accounts for almost 92% of the revenues for the company. So if ski schools, dining and retail operations don’t flourish as usual, the company will see less revenue.

Earnings and Estimates

Q3 earnings weren’t as bad as expected and the company actually beat expectations. This helped the stock rally, but when we look at the year over year numbers from the quarter there is reason to be worried about what the winter may bring. Mountains EBITDA came in $301M v the $468M the previous year and Lodging and Resort EBITDA was also down year over year.

The company had to suspend its dividend, cut capex and furlough most of its employees.

The next earnings release is September 24th, so the company might give some guidance on what to expect this ski season. Looking at estimates, analysts are not that optimistic.

For the current year, estimates have come down over the last month, from $2.61 to $2.58. For next year, analysts have dropped their numbers from $5.04 to $4.83, or 4% over the last month.

Technicals

The stock rallied and held up well considering the environment. For now, it looks like investors are giving the company a free ski pass. However, if the 21-day MA break at $218 we could see the 200-day MA test at the $200 level. Below that area, the $180 and $140 levels could come into play. The big move lower likely won’t happen unless resorts have to be shutdown again, but until COVID is vanquished, the upside will be limited.

In Summary

All-time highs are $302.76. If a vaccine comes before the winter months, the stock could rally quickly. Until then, investors should stay off this black diamond of a stock.

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Greg
Greg

Trader pour compte propre. Je partage avec vous, des analyses et contenus simplifiés. Je vous invite à nous rejoindre et à partager vos stratégies sur le Forum, avec d'autres investisseurs. Vous devez savoir, qu’investir sur les marchés financiers fait rêver plus d’un, mais n’est pas adapté à tous ! N’oubliez jamais que le risque de tout perdre est permanent.

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