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Market Overview

Vail Resorts Earnings Preview: Another Wider Loss Anticipated

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Vail Resorts (NYSE: MTN) is scheduled to report fiscal first-quarter 2012 results tomorrow, December 7, before the opening bell. Ahead of the earnings release, the resort operator announced that it would narrow the focus of its Lodging division, which will include some layoffs, due to tough economic and real estate environments. Not a particularly encouraging sign for investors, who may be more interested in whether bookings are holding up as winter begins rather than the seasonal loss.

The consensus forecast calls for Vail Resorts to report that its net loss widened from $1.20 per share in the same period a year ago to $1.54 per share for the three months that ended in October. That estimate was $1.51 per share just 60 days ago. So far, the forecast for the current quarter calls for earnings that are 9.2% higher than a year ago. Note that Vail Resorts earnings results have fallen short of consensus estimates in three of the past six quarters.

Analysts also expect the company to report that revenues for the quarter dropped 57.8% from a year ago to $98.9 million. Looking ahead to the current quarter, revenues are anticipated to be just 3.2% higher year over year.

The Company

The Broomfield, Colo.-based company is a leading mountain resort operator in the United States. Its Mountain segment operates six ski resorts, the Lodging segment owns or manages luxury hotels under the RockResorts brand name, and the Real Estate segment owns and develops real estate properties. Vail Resorts was founded in 1997 and now has a market cap of $1.6 billion.

During the three months that ended in October, the company also announced a wider net loss, though it was less than analysts had expected. Vail Resorts attributed the deeper loss to a resort acquisition and lower revenues from the Real Estate segment. Following the report, the CEO insisted in media reports that upper-income consumers were still skiing and vacationing, and they were willing to pay higher prices.

Performance

The dividend yield is 1.3%. But the company has a long-term earnings per share growth forecast of only 5.9%. The P/E and PEG ratios are higher than the industry average, and short interest is more than 10% of the float. Yet, the consensus recommendation of seven of nine analysts is to buy the stock, and they have a mean price target on the stock that is more than 14% higher than the current share price.

The share price is up more than 4% in the past week but is still down more than 8% year to date. It is above the 50-day and 200-day moving averages. Over the past six months, the stock has outperformed MGM Resorts (NYSE: MGM) and Wynn Resorts (NASDAQ: WYNN), as well as the broader markets.

Action Items:

Bullish: Investors interested in exchange traded funds invested in Vail Resorts might want to consider the following trades:

  • iShares Russell 2000 Growth Index (NYSE: IWO) is more than 25% higher than a recent 52-week low.
  • PowerShares Fundamental Pure Small Value (NYSE: PXSV) is almost 25% higher than a recent 52-week low.
  • iShares Morningstar Small Growth Index (NYSE: JKK) is about 24% higher than a recent 52-week low.

Bearish: Traders may want to consider these alternative positions:

  • Nevada Gold & Casinos (NYSE: UWN) is more than 39% higher year to date.
  • Wynn Resorts (NYSE: WYNN) is more than 14% higher year to date.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

 

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