Vail Resorts (NYSE: MTN) released its Q2 2022 earnings and revenue results that missed both earnings and revenue estimates on Monday, March 14, 2022.
What to look for: Despite the challenging start to the holiday season, the company increased its Resort Reported EBITDA guidance, demonstrating its business resilience. CEO Kirsten Lynch stated that staffing challenges, the omicron variant surge, and the confluence of storm cycles impacted the ability of its resorts to open fully, which negatively impacted revenues as a result of the disrupted guest experience. However, despite the challenges, the company has taken various measures that include investing in wages.
Earnings: Stockearning’s Estimated EPS for fiscal Q2 was $5.7, but the company produced an actual EPS of $5.47, missing estimates by $0.23. in the first quarter, the company produced an earnings surprise of $5.75 with an actual EPS loss of $3.44 versus estimates of $0.65. Historical EPS Performance for the past 12 quarters indicates that the company has topped earnings estimates 24 times (64%), matched once (2%), and missed 12 times (32%).
Revenue: The company reported revenue of $906.5 million, representing a YoY increase of 32%, but that was short of analysts' estimates of $960 million. For fiscal 2022 the company expects net income attributable to the company to be between $304 million and $350 million, with Resort Resort EBITDA expected to be between $813 and $837million. The reported EBITDA margin is expected to be at the midpoint of the guidance range at 32.9%.
Stock movement: MTN shares have lost 28.2% since the company released its last earnings release. Interestingly, following the earnings release, the company's shares have been UP 25 times in the past 47 quarters. So, the historical price reaction suggests a 53% probability of the share price going UP following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-4%, while the predicted volatility on the seventh day is +/-5%.
What analysts are saying: Deutsche Bank analyst Chris Woronka slashed the company’s price target from $331 to $309 and maintained a Hold rating on the shares ahead of the earnings release. Considering management's restatement of fiscal 2022 guidance in mid-January, a likely drop in worker sick days, and overall more pleasant weather trends since then, the analyst believes the report "may be a reasonably mild event" for the company.
Recently Truist analyst Patrice Scholes slashed his price target in MTN from $322 to $302 but maintained a Hold rating in the shares. Despite the continued "negative drumbeat" from consumers and the press surrounding the company's Park City, NH, WA, and Midwest resorts, the analyst adds that the issues he previously stated about the firm's workforce shortfall affecting customer satisfaction remain an issue. In addition, to prevent "epic unfavorable media attention," Scholes believes Vail may have to increase salaries for the 2022/2023 ski season.
JPMorgan analyst Omer Sander slashed his price target on the stock from $345 to $314 and maintained a Hold rating on the shares. Until the firm's 2022/2023 ticket pricing scheme is revealed, presumably in March, the analyst anticipates the stock to trade in a range. However, he likes Vail's move to a more advanced dedication model in the long run, which he claims aids in derisking the ski season and helps sustain mid-single-digit EBITDA expansion.
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