Ski resort operator Vail Resorts (NYSE:MTN) dropped 2.3% in Friday’s pre-market trading, as the company’s fiscal third-quarter (ended April 30, 2023) results missed the Street’s expectations. The quarter’s performance was impacted by weather-related challenges and higher expenses. Also, the company slashed its full-year earnings guidance.
Vail’s Q3 FY23 earnings per share (EPS) came in at $8.18, lagging the Street’s estimate of $8.81 and down nearly 11% compared to the prior-year quarter. The bottom line was impacted by higher expenses associated with the Park City resort lease.
Revenue Analysis
Total revenue during the quarter rose 5.2% to $1.24 billion, with strong demand from local and destination guests driving visitation and resort net revenue. However, revenue fell short of analysts’ consensus estimate of $1.27 billion.
On the other hand, some resorts in the Midwest and Mid-Atlantic regions closed earlier than originally intended due to “unseasonably warm weather and lack of terrain,” thereby reflecting softer revenue growth levels.
Pass product sales through May 30, 2023, for the upcoming 2023/2024 North American ski season increased by nearly 6% in units and about 11% in sales dollars.
Meanwhile, MTN repurchased about 1.8 million shares during the quarter for $400 million and declared a quarterly cash dividend of $2.06 per share, payable on July 12, 2023.
Weak Earnings Outlook
Looking ahead, Vail sees FY23 net income to be between $251 million and $283 million compared to the prior estimate range of $282 million to $328 million. It expects full-year EBITDA to be between $835 and $853 million, down from the prior guidance range of $828 million to $860 million.
Is Vail Resorts a Good Stock to Buy?
Following the results, Deutsche Bank analyst Chris Woronka reaffirmed his Hold rating on the stock on Friday, with a $254 price target. Although the analyst believes that the company has significant opportunities to improve its ancillary volumes, he remains concerned about issues like the ongoing labor challenges and difficult late-season comparable sales at most of its Western U.S. resorts.
Meanwhile, analysts at Bank of America and Credit Suisse reiterated a Buy rating on MTN on Friday in reaction to the results.
Wall Street’s Hold consensus rating on Vail Resorts is based on two Buys, five Holds, and one Sell. The average price target stands at $253, reflecting a possible downside of 2%. Notably, the stock has gained over 8% year-to-date.
