Vail Resorts (MTN)

Luxury ski resort company Vail Resorts (NYSE:MTN) met Wall Street’s revenue expectations in Q1 CY2025, but sales were flat year on year at $1.30 billion. Its GAAP profit of $10.54 per share was 4.7% 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 can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Vail Resorts’s sales grew at a sluggish 6.8% compounded annual growth rate over the last five years. This was below our standard for the consumer discretionary sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Vail Resorts’s recent performance shows its demand has slowed as its annualized revenue growth of 1.2% 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 8.61 million in the latest quarter. Over the last two years, Vail Resorts’s skier visits averaged 12.2% 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’s $1.30 billion of revenue was flat year on year and in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.2% over the next 12 months. Although this projection suggests its newer products and services will catalyze 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 generally stayed the same, averaging 18.7% 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 Q1, Vail Resorts generated an operating margin profit margin of 44.9%, up 2.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

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.

Vail Resorts’s EPS grew at a solid 14.8% compounded annual growth rate over the last five years, higher than its 6.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q1, Vail Resorts reported EPS at $10.54, up from $9.54 in the same quarter last year. This print beat analysts’ estimates by 4.7%. Over the next 12 months, Wall Street expects Vail Resorts’s full-year EPS of $7.82 to stay about the same.

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 impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 15.3% over the last two years, 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 12.1%, 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. Unfortunately, Vail Resorts’s ROIC averaged 3.9 percentage point decreases over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Vail Resorts reported $467 million of cash and $2.70 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 $871.7 million of EBITDA over the last 12 months, we view Vail Resorts’s 2.6× net-debt-to-EBITDA ratio as safe. We also see its $156 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 was encouraging to see Vail Resorts beat analysts’ EPS expectations this quarter. On the other hand, its number of skier visits missed. Zooming out, we think this was a mixed quarter. The stock traded up 1.6% to $157.59 immediately following the results.

Updated: June 14, 2025 at 10:47 PM EDT

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Vail Resorts.

Vail Resorts isn’t a terrible business, but it doesn’t pass our bar. To kick things off, 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 projected EPS for the next year is lacking.

Vail Resorts’s P/E ratio based on the next 12 months is 18.6x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $179.44 on the company (compared to the current share price of $151.41).

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.