Vail Resorts (MTN) has only one beat of the Zacks Consensus Estimate over the last five quarters. Recently a big miss on top and bottom has pushed analysts to lower earnings estimates. That has made this stock a Zacks #5 Rank (Strong Sell), and today it is the Bear of the Day.
This has been a heck of a winter. Lots of snow and lots of cold. Those super cold stretches might have actually hurt ski resorts more than they helped them. Yes, there was plenty of snow, but when the mercury falls that low, people tend to stay inside.
Vail Resorts, Inc. operates in three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates eight ski resort properties, including the Vail Mountain, Breckenridge Ski, Keystone, Beaver Creek, Heavenly Mountain, Northstar, Kirkwood Mountain, and Canyons resorts. Vail Resorts, Inc. was founded in 1997 and is based in Broomfield, Colorado.
MTN Misses Estimates
As noted already, MTN has missed the Zacks Consensus Estimate in four of the last five quarters. The most recent miss was a big one, coming in $0.31 light of the mark for a 16% negative earnings surprise. The company also missed on the topline too.
Other recent misses weren't as big, but were 3.5%, 3.6% and 6.3%, so not just missing by a penny either. The lone beat was of three cents for a 1.7% positive earnings surprise.
Estimates Falling off The Mountain
After the most recent earnings announcement, estimates were slashed. But prior to that, investors could have seen the trouble coming by watching the decline in estimates. The Zacks Consensus Estimate for 2014 kicked lower in January moving from $1.32 to $1.21. That reduction could have signaled a good time to get off the slopes.
Following the most recent earnings report, 2014 estimates have been cut from $1.21 to $0.77. 2015 estimates were also slashed moving from $1.74 to $1.54.
The lower estimates aren't doing the forward PE multiple any favors, as it has ballooned to 77x compared to 25x for the industry average. An even steeper mountain to climb is the trailing PE of 131x compared to 29x for the rest of the industry. Price to book comes in at 3.2x compared to 2.9x and price to sales is in line with the industry average.
The price and consensus chart shows estimates starting the last few years at a pretty high level then falling over time. Despite that fact the stock continues to climb higher. That increase in stock price with lower estimates creates a very large valuation, and at some point investors will no longer want to that the chair lift to the top of this mountain.
Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.
Brian is also the editor of Breakout Growth Trader a trading service that focuses on small cap stocks and also carries a risk limiting strategy. Subscribers get daily emails along with buy, and sell alerts.
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