Vail Resorts, Inc., through its subsidiaries, operates mountain resorts and urban ski areas in the United States. Its Mountain segment operates Vail Mountain, Breckenridge Ski, Keystone, Beaver Creek, and Crested Butte Mountain resorts in Colorado; Heavenly Mountain, Northstar, and Kirkwood Mountain resorts in the Lake Tahoe area of California and Nevada; Mount Sunapee Resort in New Hampshire; Park City resort in Utah; Stowe and Okemo Mountain Resort in Vermont; and Stevens Pass Mountain Resort in Washington.
MTN does not report stunning EBITDA growth.In spite of that, the company’s EBITDA ratio is positive and equal to 25%.I feel that considering the quality of the business, I see room for MTN to grow into its valuation over time.General and administrative expenses decreased a 1%, which reduces the company’s EBITDA.
With an asset/liability ratio of more than 1x, MTN’s balance sheet looks stable.In Q2, the total amount of assets was equal to $6165 million, with total liabilities of $4479 million.MTN reports $1301 million in cash and cash equivalents.I believe that the company has a good amount of cash to conduct additional R&D and increase its marketing efforts.The balance sheet shows deferred revenue of $480 million, which I appreciate.Deferred revenue represents a prepayment by the company’s clients that have yet to be delivered.In short, the company receives cash in advance of it being earned.Besides, Vail Resorts Inc has positive working capital, which investors will like.It means that MTN can cover its short-term liabilities when they come due.
In my experience, Vail Resorts Inc reports a significant amount of goodwill.It is equal to $1760 million.It is difficult to know the real value of intangibles and goodwill.To sum up, there is a potential goodwill impairment risk.The company could review and impair intangible assets, which could lead to a decline in the share price.
In Q2 MTN reported quarterly sales of $684 million, and gross profit of $351 million.The gross profit ratio was equal to 51%.Besides, MTN is profitable, which is helpful.Vail Resorts Inc released positive quarterly EBITDA of $274 million.I believe that when more investors get to know the financial statistics of MTN, the stock demand will increase.MTN also showed positive net income of $147.798 million.I feel that considering the quality of the business, I see room for MTN to grow into its valuation over time.
Valuation and Risks
I assume sales of $2738 million.So, MTN trades at 0.62x forward sales.In my view, it can be justified due to the fact that Vail Resorts Inc has decent margins.
MTN’s short term debt is less significant than the company’s cash and cash equivalents.I believe that Vail Resorts Inc may not have to worry about any liquidity risk.MTN trades at 22x EBITDA, which may not seem cheap. Nevertheless with the company’s EBITDA margin of 25% the EV/EBITDA ratio makes sense.
The following MTN’s insiders acquired or sold equity recently.MTN’s traders will most likely study this information:
+In 2020-12-05, director Rawlinson Nadia Nicole sold equity of MTN.
+In 2020-12-05, director Rawlinson Nadia Nicole acquired stock of MTN.
+In 2020-10-06, director Vaughn Peter A sold equity of MTN.
If you see an error, please contact the editor. We don’t own MTN’s shares, and this is our opinion. We do not offer a recommendation to buy or sell any stock.