When Vail Resorts, Inc. (NYSE:MTN) released its most recent earnings update (31 October 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Vail Resorts performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see MTN has performed.
Commentary On MTN’s Past Performance
MTN’s trailing twelve-month earnings (from 31 October 2018) of US$300m has jumped 23% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 43%, indicating the rate at which MTN is growing has slowed down. Why could this be happening? Well, let’s examine what’s occurring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Vail Resorts has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.7% exceeds the US Hospitality industry of 7.7%, indicating Vail Resorts has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Vail Resorts’s debt level, has increased over the past 3 years from 11% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 105% to 99% over the past 5 years.
What does this mean?
Vail Resorts’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Vail Resorts to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MTN’s future growth? Take a look at our free research report of analyst consensus for MTN’s outlook.
- Financial Health: Are MTN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 October 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.