Good Reason to Like Vail Resorts
Vail Resorts, Inc. (NYSE:MTN) stock isn’t the first thing that comes to mind when thinking about the stock market. Yet, this ski resort operator is firing on all cylinders, and the company’s operations are just one more indicator of the health of domestic spending.
Vail Resorts, Inc. can be considered a micro-cap stock. It’s worth about $5.0 billion in market capitalization, and it even pays a dividend (just hiked 30% because business conditions are good).
The company is, of course, a lot more than just a ski resort operator. It’s a major hotel business, including the Grand Teton Lodge Company in Jackson Hole, Wyoming. And as is usually the case with resort operators, Vail Resorts is in real estate development.
The company’s stock chart is featured below:
The stock’s been a huge success that has lasted several years, and it’s been pretty much under the radar with solid growth prospects ahead.
Chart courtesy of www.StockCharts.com
In its most recent quarter (the second fiscal quarter of 2016, ended January 31, 2016), Vail Resorts saw a 20% increase in its total lift revenue, which is significant.
According to the company, this comprised a 12.5% comparable improvement in total visits, along with a 6.8% increase in ticket prices.
The company noted that its ski school revenue improved more than eight percent in its second fiscal quarter, and food and beverage sales grew 16% comparatively.
Likely due to the strength of the U.S. dollar relative to a lot of other global currencies, international visits were flat to down on a comparative basis (with the exception of Australian visitors).
Management cited the “strong U.S. economy” as a reason for the latest quarterly growth. While this might be an exceptional description for this particular business, double-digit total lift sales growth is a positive indicator regarding domestic spending.
This fiscal year, Vail Resorts plans approximately $100 million in capital expenditures to upgrade maintenance, chairlifts, and restaurant operations.
The company recently received a favorable tax settlement from the IRS, which boosted second-quarter earnings significantly. Excluding the settlement, Vail Resorts’ bottom line improved 27% over the second quarter of 2015.
Management recently increased its fiscal 2016 earnings outlook range and, as mentioned, the company boosted its quarterly dividend 30% to $0.81 per share from $0.6225.
What does a ski resort operator have to say about the domestic U.S. economy? Well, quite a bit actually. Not only is the company’s financial growth telling in itself, better business conditions highlight more confidence on the part of consumers to part with their money.
Vail Resorts should continue to be a solid success this year, both operationally and on the stock market.
While the broader U.S. economy still is not growing in a coherent manner, domestic data among a number of industries and with employment reveals generally improving business conditions.
And, though it may take several more quarters for the stock market to find a new equilibrium, these positive financial metrics continue to support the view that the current bull market is intact.