Vail Resorts (MTN) Stock Down 6% YTD: Can It Revive in 2024?
Shares of Vail Resorts, Inc. MTN have declined 6.3% in the year-to-date period against the Zacks Leisure and Recreation Services industry’s 21.4% rise. The company’s performance was hurt by lower demand for destination mountain travel and weather-related operational disruptions. This and softness in the ancillary business and cost inflation added to the downside.
In first-quarter fiscal 2024, the company’s margins were affected by inflationary labor costs. The mountain segment’s labor-related costs increased 3.7% compared with the prior-year quarter’s levels. The segment's operating expenses increased 6.3% year over year because of investments in employee wages and salaries and the impact of inflation. Moving ahead, the company anticipates inflationary costs to persist for some time.
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Can the Stock Stage a Comeback in 2024?
The Zacks Rank #3 (Hold) company’s sales and earnings in the fiscal 2024 are likely to witness growth of 6% and 35.2% year over year, respectively. Earnings estimates for the fiscal 2024 have increased from $9.08 to $9.11 per share in the past 30 days. This depicts analysts’ optimism regarding the stock’s growth potential.
In 2024, the company is poised to benefit from its offerings such as Epic Pass, Epic Local Pass, Epic Day Pass and Epic Coverage products and unit expansion (in international and local geographies). This and the focus on digital initiatives and media advertising bode well.
The company reported solid season pass sales for the 2023/24 North American ski season. Season-to-date (through Dec 4, 2023), the company stated that Pass product sales increased approximately 4% in units and nearly 11% in sales dollars compared with the prior-year period’s (through Dec 5, 2022) levels. The company reported strong unit growth concerning its renewing pass holders in destination markets. Also, it stated benefits from an 8% price increase (relative to the 2022/23 season).
During the fiscal first quarter, the company launched the My Epic app, offering features like Mobile Pass, mobile lift tickets, interactive trail maps, real-time and predictive lift line wait times, personalized statistics, My Epic Gear and other pertinent information to enhance the guest experience.
The company also mentioned plans to introduce new technology for the 2023/2024 North American ski season that allows guests to store their pass product or lift ticket directly on their phone, eliminating the need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail.
The company intends to launch My Epic Gear for the 2024/2025 winter season at Vail, Beavercreek, Breckenridge, Keystone, Whistler Blackcomb, Park City Mountain, CrestedButte, Heavenly, Northstar, Stowe, Okemo and Mount Snow. Further expansions are expected in upcoming years.
In November 2023, MTN acquired a majority stake in Crans-Montana Mountain Resort, its second European ski resort. The move aligns with MTN's growth strategy, enhancing value for pass holders worldwide. Upon the acquisition’s completion, MTN will own 84% of the entity managing resort operations, 80% of SportLife ski school and 100% of 11 mountain restaurants.
Vail Resorts expects the resort to generate CHF 5 million EBITDA in its first full year, ending July 31, 2025. Also, Vail Resorts plans a CHF 30 million one-time capital spending over the next five years to enhance the guest experience. The resort is projected to generate more than CHF 15 million annual EBITDA after these investments and Epic Pass inclusion.
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