Vail Resorts runs a highly seasonal operation that books profits in its fiscal second and third quarters (which cover the months of November through April) and shows losses in the first and fourth. Looking at yearly net income, which is used to calculate valuation metrics such as P/E, undersells the fundamental earning power of the business, and management is making efforts to turn the weak quarters around.
- Vail Resorts has seen its value rocket upward for years.
- There are some cracks in the armor, but no company is perfect. Despite the rally, the company holds solid value here.
- Management has been on an acquisition binge, picking up a variety of properties over the past five years.
“It is tough to buy companies near all-time highs, but what has assuaged many fears by new investors is that the strength in Vail Resorts has been driven by sizeable improvement in operating results, and not by trading multiple expansions.”