MTN

We rate VAIL RESORTS INC (MTN) as a Reduce with a composite score of 41.2/100 at a current price of $141.87. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (82th percentile) and momentum (56th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (16th percentile) and value (27th percentile) tempers our overall conviction. We assign a Narrow Moat rating (48/100), High uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

VAIL RESORTS INC holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 41.2/100 places it at rank #3397 in our full 7,333-stock universe. At $5.2B in market capitalization, VAIL RESORTS INC is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 20%, though momentum at the 56th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 58% (-1.4pp vs sector) narrow to operating margins of 11% (+7.4pp vs sector) and net margins of 3.7%, yielding a gross-to-net conversion rate of 6%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $141.87, VAIL RESORTS INC is trading at a premium to fundamental value. Our value factor score of 27/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 5.9x (a 75% discount to the sector median of 23.7x), EV/EBITDA of 5.2x (discounted to peers), P/B of 6.8x, P/S of 1.3x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to VAIL RESORTS INC. Key risk factors include significant leverage (424% debt-to-equity), weak quality scores (16th percentile), the combination of leverage (424% D/E) and thin margins (3.7% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (424% debt-to-equity); weak quality scores (16th percentile); the combination of leverage (424% D/E) and thin margins (3.7% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 82th percentile and quality factor at the 16th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 58% provide a buffer against cost pressures; above-average stability (82th percentile) suggests predictable business dynamics; a 6.09% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate VAIL RESORTS INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 115.7%, and the balance sheet is managed within acceptable parameters (D/E: 424%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; VAIL RESORTS INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 6.09% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, VAIL RESORTS INC receives a Reduce rating with a composite score of 41.2/100 (rank #3397 of 7,333). Our quantitative framework assigns a Narrow Moat (48/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 42/100.

Our analysis does not support a constructive view on VAIL RESORTS INC at this time. The combination of the current quantitative profile, high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.