Market Beat: A look at the ski industry
March 15, 2018
Locally our ski resorts have had a pretty tough winter. Snowfall has been well below average after last year's record winter.
Hopefully we'll get another "miracle March" to help out with the spring season. I can recall a few times over the 40 plus years that I've been skiing in this area that we've had over 20 feet of snowfall in the month of March alone.
After the last storm it looks like the historic World Championship Longboard races on March 18 at Plumas ski bowl will be on. The January and February races had to be canceled due to lack of snow. If you've never seen a longboard race on the old wooden skis like Snowshoe Thompson used you should check it out, I've been racing for a few years and it's a lot of fun.
Nationally there are over 450 ski resorts operating in the United States. There are 13.9 million skiers and another 7.6 million snowboarders. Almost 10 million people went skiing or snowboarding in the U.S. in the last 12 months.
Vail Resorts is a publicly traded company that owns one of our local resorts, Northstar. They also own Heavenly, Kirkwood and Park City, Utah as well as resorts in Colorado, British Columbia and Australia.
Vail's symbol is MTN for mountain. They have a market cap over $9 billion dollars. Their dividend yield is 1.86 percent. The share price has grown over 250 percent in the last five years.
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Recently they announced their second quarter earnings results, and the report was not too bad considering the weak snowpack in the Western United States. Revenue grew 1 percent to $734.6 million for the quarter and the trailing 12-month revenue is almost $2 billion. Revenue from lift operations increased about 7 percent. Income was up 58 percent to $235 million.
Season pass sales have been strong. Their earnings also benefited from the Tax Cuts and Jobs Act to the tune of about $60 million. The trailing 12-month PE, or price to earnings ratio, is fairly high at 28.92.
Overall the outlook for the ski industry is pretty bright and we should expect to see continued growth. Climate variability is one of the factors that could damper that.
Ski conditions are pretty good right now so get out and enjoy it while you can. Let's hope for that miracle March.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.