Intrinsic value of Vail Resorts - MTN

Previous Close

$184.23

  Intrinsic Value

$138.92

stock screener

  Rating & Target

sell

-25%

Previous close

$184.23

 
Intrinsic value

$138.92

 
Up/down potential

-25%

 
Rating

sell

We calculate the intrinsic value of MTN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 7.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
Revenue, $m
  2,027
  2,152
  2,283
  2,419
  2,560
  2,708
  2,862
  3,023
  3,191
  3,366
  3,550
  3,742
  3,943
  4,153
  4,373
  4,603
  4,845
  5,097
  5,362
  5,640
  5,930
  6,235
  6,555
  6,891
  7,242
  7,611
  7,998
  8,404
  8,830
  9,277
Variable operating expenses, $m
  1,298
  1,367
  1,439
  1,514
  1,592
  1,673
  1,758
  1,847
  1,939
  2,036
  1,955
  2,061
  2,172
  2,288
  2,409
  2,536
  2,669
  2,808
  2,954
  3,107
  3,267
  3,435
  3,611
  3,796
  3,989
  4,193
  4,406
  4,629
  4,864
  5,110
Fixed operating expenses, $m
  291
  298
  304
  311
  318
  325
  332
  339
  347
  354
  362
  370
  378
  387
  395
  404
  413
  422
  431
  440
  450
  460
  470
  480
  491
  502
  513
  524
  536
  547
Total operating expenses, $m
  1,589
  1,665
  1,743
  1,825
  1,910
  1,998
  2,090
  2,186
  2,286
  2,390
  2,317
  2,431
  2,550
  2,675
  2,804
  2,940
  3,082
  3,230
  3,385
  3,547
  3,717
  3,895
  4,081
  4,276
  4,480
  4,695
  4,919
  5,153
  5,400
  5,657
Operating income, $m
  438
  488
  540
  594
  651
  710
  772
  837
  905
  976
  1,232
  1,311
  1,393
  1,479
  1,569
  1,664
  1,763
  1,868
  1,977
  2,093
  2,214
  2,341
  2,474
  2,614
  2,762
  2,917
  3,079
  3,250
  3,430
  3,619
EBITDA, $m
  776
  836
  898
  963
  1,030
  1,101
  1,175
  1,252
  1,333
  1,418
  1,507
  1,600
  1,698
  1,800
  1,908
  2,020
  2,138
  2,262
  2,392
  2,529
  2,673
  2,823
  2,981
  3,148
  3,322
  3,506
  3,698
  3,901
  4,114
  4,337
Interest expense (income), $m
  46
  70
  79
  88
  98
  107
  118
  129
  140
  152
  164
  177
  190
  204
  219
  235
  251
  268
  285
  304
  323
  343
  365
  387
  411
  435
  461
  488
  516
  546
  577
Earnings before tax, $m
  368
  409
  452
  496
  543
  592
  643
  697
  753
  812
  1,055
  1,120
  1,188
  1,260
  1,335
  1,413
  1,496
  1,583
  1,674
  1,769
  1,870
  1,976
  2,087
  2,204
  2,327
  2,456
  2,592
  2,734
  2,884
  3,042
Tax expense, $m
  99
  110
  122
  134
  147
  160
  174
  188
  203
  219
  285
  302
  321
  340
  360
  382
  404
  427
  452
  478
  505
  533
  564
  595
  628
  663
  700
  738
  779
  821
Net income, $m
  269
  298
  330
  362
  396
  432
  470
  509
  550
  593
  770
  818
  867
  920
  974
  1,032
  1,092
  1,155
  1,222
  1,292
  1,365
  1,442
  1,524
  1,609
  1,698
  1,793
  1,892
  1,996
  2,106
  2,221

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  4,369
  4,639
  4,920
  5,212
  5,517
  5,836
  6,168
  6,514
  6,877
  7,255
  7,651
  8,064
  8,497
  8,950
  9,424
  9,921
  10,441
  10,985
  11,556
  12,154
  12,781
  13,438
  14,128
  14,850
  15,608
  16,403
  17,237
  18,112
  19,030
  19,993
Adjusted assets (=assets-cash), $m
  4,369
  4,639
  4,920
  5,212
  5,517
  5,836
  6,168
  6,514
  6,877
  7,255
  7,651
  8,064
  8,497
  8,950
  9,424
  9,921
  10,441
  10,985
  11,556
  12,154
  12,781
  13,438
  14,128
  14,850
  15,608
  16,403
  17,237
  18,112
  19,030
  19,993
Revenue / Adjusted assets
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
Average production assets, $m
  2,291
  2,432
  2,580
  2,733
  2,893
  3,060
  3,234
  3,416
  3,606
  3,804
  4,011
  4,228
  4,455
  4,693
  4,941
  5,202
  5,474
  5,760
  6,059
  6,373
  6,701
  7,046
  7,407
  7,786
  8,184
  8,600
  9,038
  9,496
  9,978
  10,483
Working capital, $m
  -278
  -295
  -313
  -331
  -351
  -371
  -392
  -414
  -437
  -461
  -486
  -513
  -540
  -569
  -599
  -631
  -664
  -698
  -735
  -773
  -812
  -854
  -898
  -944
  -992
  -1,043
  -1,096
  -1,151
  -1,210
  -1,271
Total debt, $m
  1,433
  1,600
  1,773
  1,954
  2,143
  2,339
  2,545
  2,759
  2,983
  3,217
  3,461
  3,717
  3,984
  4,264
  4,557
  4,864
  5,185
  5,522
  5,875
  6,244
  6,632
  7,038
  7,464
  7,910
  8,379
  8,870
  9,385
  9,926
  10,493
  11,089
Total liabilities, $m
  2,700
  2,867
  3,040
  3,221
  3,410
  3,606
  3,812
  4,026
  4,250
  4,484
  4,728
  4,984
  5,251
  5,531
  5,824
  6,131
  6,452
  6,789
  7,142
  7,511
  7,899
  8,305
  8,731
  9,177
  9,646
  10,137
  10,652
  11,193
  11,760
  12,356
Total equity, $m
  1,669
  1,772
  1,879
  1,991
  2,108
  2,229
  2,356
  2,489
  2,627
  2,771
  2,923
  3,081
  3,246
  3,419
  3,600
  3,790
  3,988
  4,196
  4,414
  4,643
  4,882
  5,133
  5,397
  5,673
  5,962
  6,266
  6,585
  6,919
  7,269
  7,637
Total liabilities and equity, $m
  4,369
  4,639
  4,919
  5,212
  5,518
  5,835
  6,168
  6,515
  6,877
  7,255
  7,651
  8,065
  8,497
  8,950
  9,424
  9,921
  10,440
  10,985
  11,556
  12,154
  12,781
  13,438
  14,128
  14,850
  15,608
  16,403
  17,237
  18,112
  19,029
  19,993
Debt-to-equity ratio
  0.860
  0.900
  0.940
  0.980
  1.020
  1.050
  1.080
  1.110
  1.140
  1.160
  1.180
  1.210
  1.230
  1.250
  1.270
  1.280
  1.300
  1.320
  1.330
  1.340
  1.360
  1.370
  1.380
  1.390
  1.410
  1.420
  1.430
  1.430
  1.440
  1.450
Adjusted equity ratio
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382
  0.382

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  269
  298
  330
  362
  396
  432
  470
  509
  550
  593
  770
  818
  867
  920
  974
  1,032
  1,092
  1,155
  1,222
  1,292
  1,365
  1,442
  1,524
  1,609
  1,698
  1,793
  1,892
  1,996
  2,106
  2,221
Depreciation, amort., depletion, $m
  338
  348
  358
  369
  380
  391
  403
  415
  428
  442
  275
  290
  305
  321
  338
  356
  375
  395
  415
  436
  459
  483
  507
  533
  561
  589
  619
  650
  683
  718
Funds from operations, $m
  607
  646
  688
  731
  776
  823
  873
  924
  978
  1,035
  1,045
  1,107
  1,173
  1,241
  1,313
  1,388
  1,467
  1,550
  1,637
  1,728
  1,824
  1,925
  2,031
  2,142
  2,259
  2,382
  2,511
  2,646
  2,789
  2,939
Change in working capital, $m
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
Cash from operations, $m
  623
  664
  706
  750
  796
  844
  894
  946
  1,001
  1,059
  1,070
  1,134
  1,200
  1,270
  1,343
  1,419
  1,500
  1,584
  1,673
  1,766
  1,864
  1,967
  2,075
  2,188
  2,307
  2,432
  2,564
  2,702
  2,847
  3,000
Maintenance CAPEX, $m
  -148
  -157
  -167
  -177
  -187
  -198
  -210
  -221
  -234
  -247
  -261
  -275
  -290
  -305
  -321
  -338
  -356
  -375
  -395
  -415
  -436
  -459
  -483
  -507
  -533
  -561
  -589
  -619
  -650
  -683
New CAPEX, $m
  -136
  -141
  -147
  -153
  -160
  -167
  -174
  -182
  -190
  -198
  -207
  -217
  -227
  -237
  -249
  -260
  -273
  -286
  -299
  -314
  -329
  -345
  -361
  -379
  -397
  -417
  -437
  -459
  -481
  -505
Cash from investing activities, $m
  -284
  -298
  -314
  -330
  -347
  -365
  -384
  -403
  -424
  -445
  -468
  -492
  -517
  -542
  -570
  -598
  -629
  -661
  -694
  -729
  -765
  -804
  -844
  -886
  -930
  -978
  -1,026
  -1,078
  -1,131
  -1,188
Free cash flow, $m
  340
  365
  392
  419
  448
  479
  510
  543
  577
  614
  602
  642
  684
  727
  773
  821
  871
  924
  979
  1,038
  1,099
  1,163
  1,231
  1,302
  1,377
  1,455
  1,538
  1,624
  1,716
  1,811
Issuance/(repayment) of debt, $m
  161
  167
  174
  181
  189
  197
  205
  214
  224
  234
  245
  256
  267
  280
  293
  307
  321
  337
  353
  370
  387
  406
  426
  447
  468
  491
  515
  541
  567
  595
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  161
  167
  174
  181
  189
  197
  205
  214
  224
  234
  245
  256
  267
  280
  293
  307
  321
  337
  353
  370
  387
  406
  426
  447
  468
  491
  515
  541
  567
  595
Total cash flow (excl. dividends), $m
  500
  532
  565
  600
  637
  675
  715
  757
  801
  847
  847
  898
  951
  1,007
  1,066
  1,128
  1,192
  1,260
  1,332
  1,407
  1,486
  1,569
  1,657
  1,748
  1,845
  1,946
  2,053
  2,165
  2,283
  2,407
Retained Cash Flow (-), $m
  -98
  -103
  -107
  -112
  -117
  -122
  -127
  -132
  -138
  -145
  -151
  -158
  -165
  -173
  -181
  -190
  -199
  -208
  -218
  -228
  -239
  -251
  -263
  -276
  -290
  -304
  -319
  -334
  -351
  -368
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  403
  429
  458
  489
  520
  554
  588
  625
  663
  703
  696
  740
  786
  834
  885
  938
  994
  1,052
  1,114
  1,179
  1,247
  1,318
  1,393
  1,472
  1,555
  1,643
  1,734
  1,831
  1,932
  2,039
Discount rate, %
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
  381
  383
  383
  380
  374
  366
  355
  341
  324
  306
  266
  247
  226
  205
  183
  161
  140
  120
  101
  84
  68
  54
  43
  33
  25
  18
  13
  9
  6
  4
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Vail Resorts, Inc. is a holding company. The Company operates through three segments: Mountain, Lodging and Real Estate. Its Mountain segment operates over 10 mountain resort properties and approximately three urban ski areas, as well as ancillary services, primarily including, ski school, dining, and retail/rental operations. It operates mountain resorts and urban ski areas, such as Whistler Blackcomb in British Columbia, Canada. In the Lodging segment, it owns and/or manages a collection of luxury hotels and condominiums under its RockResorts brand, as well as other lodging properties and various condominiums; National Park Service (NPS) concessionaire properties, including the Grand Teton Lodge Company (GTLC), which operates destination resorts in Grand Teton National Park; Colorado Mountain Express (CME), and mountain resort golf courses. Its Real Estate segment owns, develops and sells real estate in and around its resort communities.

FINANCIAL RATIOS  of  Vail Resorts (MTN)

Valuation Ratios
P/E Ratio 34.9
Price to Sales 3.9
Price to Book 4.7
Price to Tangible Book
Price to Cash Flow 16.1
Price to Free Cash Flow 23.5
Growth Rates
Sales Growth Rate 19.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 32.1%
Cap. Spend. - 3 Yr. Gr. Rate 4.1%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 78.5%
Total Debt to Equity 81%
Interest Coverage 9
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 9.6%
Ret/ On T. Cap. - 3 Yr. Avg. 8.7%
Return On Equity 17.3%
Return On Equity - 3 Yr. Avg. 16%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 43.3%
Gross Margin - 3 Yr. Avg. 31.9%
EBITDA Margin 30.6%
EBITDA Margin - 3 Yr. Avg. 27.5%
Operating Margin 19.9%
Oper. Margin - 3 Yr. Avg. 17.3%
Pre-Tax Margin 18.2%
Pre-Tax Margin - 3 Yr. Avg. 14.7%
Net Profit Margin 11.1%
Net Profit Margin - 3 Yr. Avg. 9.5%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 31.6%
Payout Ratio 69.2%

MTN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTN stock intrinsic value calculation we used $1907.218 million for the last fiscal year's total revenue generated by Vail Resorts. The default revenue input number comes from 0001 income statement of Vail Resorts. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MTN stock valuation model: a) initial revenue growth rate of 6.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.6%, whose default value for MTN is calculated based on our internal credit rating of Vail Resorts, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Vail Resorts.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MTN stock the variable cost ratio is equal to 64.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $285 million in the base year in the intrinsic value calculation for MTN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.5% for Vail Resorts.

Corporate tax rate of 27% is the nominal tax rate for Vail Resorts. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MTN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MTN are equal to 113%.

Life of production assets of 14.6 years is the average useful life of capital assets used in Vail Resorts operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MTN is equal to -13.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1571.156 million for Vail Resorts - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 40.323 million for Vail Resorts is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Vail Resorts at the current share price and the inputted number of shares is $7.4 billion.

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