Vail Resorts (MTN)

Luxury ski resort company Vail Resorts (NYSE:MTN) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 5.5% year on year to $1.14 billion. Its GAAP profit of $6.56 per share was 3.8% above analysts’ consensus estimates.

Company Overview

Founded by two Aspen, Colorado ski patrol guides, Vail Resorts (NYSE:MTN) is a mountain resort company offering luxury experiences in over 30 locations across the globe.

Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.

Competitors offering luxury ski resort experiences include Alterra Mountain Company and Boyne Resorts while companies offering cheaper leisure experiences include SeaWorld (NYSE:SEAS) and Six Flags (NYSE:SIX).

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Vail Resorts’s sales grew at a sluggish 4.2% compounded annual growth rate over the last five years. This fell short of our benchmark for the consumer discretionary sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Vail Resorts’s recent history shows its demand has slowed as its annualized revenue growth of 2.1% over the last two years was below its five-year trend. Note that COVID hurt Vail Resorts’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.

We can dig further into the company’s revenue dynamics by analyzing its number of skier visits, which reached 7.76 million in the latest quarter. Over the last two years, Vail Resorts’s skier visits averaged 10.9% year-on-year declines. Because this number is lower than its revenue growth during the same period, we can see the company’s monetization has risen.

This quarter, Vail Resorts grew its revenue by 5.5% year on year, and its $1.14 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 3.8% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.

Vail Resorts’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 17.5% over the last two years. This profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.

In Q4, Vail Resorts generated an operating profit margin of 33.8%, up 1.3 percentage points year on year. This increase was a welcome development and shows it was recently more efficient because its expenses grew slower than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Vail Resorts, its EPS declined by 1.4% annually over the last five years while its revenue grew by 4.2%. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

In Q4, Vail Resorts reported EPS at $6.56, up from $5.76 in the same quarter last year. This print beat analysts’ estimates by 3.8%. Over the next 12 months, Wall Street expects Vail Resorts’s full-year EPS of $6.82 to grow 19.2%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Vail Resorts has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 11% over the last two years, slightly better than the broader consumer discretionary sector.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Vail Resorts historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 11.4%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Vail Resorts’s ROIC averaged 1.9 percentage point increases each year. This is a good sign, and we hope the company can continue improving.

Vail Resorts reported $488.2 million of cash and $2.7 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $870.9 million of EBITDA over the last 12 months, we view Vail Resorts’s 2.5× net-debt-to-EBITDA ratio as safe. We also see its $152.5 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It encouraging to see Vail Resorts narrowly top analysts’ skier visits expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a decent quarter featuring some areas of strength. The stock traded up 3.9% to $159.62 immediately after reporting.

Updated: May 15, 2025 at 10:09 PM EDT

When considering an investment in Vail Resorts, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Vail Resorts’s business quality ultimately falls short of our standards. To begin with, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its strong operating margins show it’s a well-run business, the downside is its number of skier visits has disappointed. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Vail Resorts’s P/E ratio based on the next 12 months is 18.7x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $181.64 on the company (compared to the current share price of $151.38).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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