Vail Resorts, Inc. MTN continues to drive revenues through efficient marketing efforts. Moreover, increased focus on acquisitions and mergers remains a vital growth strategy for the company. However, high costs of operations, as well as added expenses stemming from acquisitions, remain concerns.
Notably, the company’s shares have surged 21.9% over the past year against the industry’s collective decline of 6.1%. The company’s earnings also beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 4.8%.
The company continues to tread on a growth trajectory by virtue of its full-proof business model and various guest-centric offerings.
Marketing Efforts & Focus on Acquisition Bode Well
Vail Resorts has a season pass program under which the company offers a variety of season pass products for all the mountain resorts and urban ski areas in both domestic, and international markets. Increased demand for skiing led the company witness higher season pass sales lately.
Robust growth in season pass sales reflects Vail Resorts’ efficient guest-focused marketing efforts. The company, with the help of data analytics, provides targeted and personalized services to guests. Guest data is captured through season pass programs; e-commerce platforms — including mobile lift ticket sales; the EpicMix application and operational processes at the lift ticket windows. Additionally, Vail Resorts involves in digital marketing, and media advertising to drive traffic and sales.
In the fourth quarter of fiscal 2018, North American ski season pass sales increased approximately 25% in units and 15% in sales dollars, both on a year-over-year basis. Excluding sales of military passes to new purchasers, who were not pass holders in the last year, season pass sales increased approximately 9% in units and 12% in sales dollars over the comparable period. The company witnessed season pass sales increase across all products and geographies, including the destination markets.
Meanwhile, Vail Resorts extensively focuses on acquisitions and mergers to build a stronger portfolio of differentiated, and varied services. The company expects these acquisitions to positively contribute to its operating results going ahead.
On Aug 15, 2018, the company acquired Stevens Pass Resort in Washington from Ski Resort Holdings, LLC for $64 million. Additionally, on Sep 27, 2018, management acquired Triple Peaks, LLC, the parent company of Okemo Mountain Resort in Vermont; Crested Butte Mountain Resort in Colorado; and Mount Sunapee Resort in New Hampshire for a cash price of roughly $74 million.
While Vail Resorts’ relentless acquisition and merger are likely to prove beneficial over the long term, there are certain short-term risks associated. The company is somewhat struggling with added expenses, stemming from acquisitions. In fiscal 2018, EBITDA included $10.2 million of acquisition and integration-related expenses.
Additionally, Vail Resorts’ operational efficiencies come at the cost of increased expenses. During the fourth quarter of fiscal 2018, operating expenses in the mountaineering and lodging segments increased 7% and 5.6%, respectively, from the year-ago quarter. Total segmental operating expenses in fiscal 2018 increased 5.5% year over year.
Zacks Rank & Stocks to Consider
Vail Resorts currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Hudson HUD, Manchester United MANU and Marcus Corporation MCS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hudson, Manchester United and Marcus Corporation’s earnings for the current year are expected to increase by 104.6%, 21.4% and 22.1%, respectively.
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