Griffin Butler

Senior Project Advisor

Eric Wehrly

Document Type

Project

Publication Date

Spring 2023

Keywords

Vail Ski Resorts, Financial Review, Valuation Analysis, Ski Industry

Abstract

This paper is organized by several sections. Section 1 provides a general description of Vail as a company. This includes a brief description of its history and experienced executive team as well as its products and segmentation, customer base, and drivers of growth.

Section 2 conducts a comprehensive analysis of Vail’s competitive standing compared to its peers in the ski resort and hotels industries. This section identifies the factor conditions conducive to profitable operations, demand for its products, industries in support of operations, and the competitive advantages Vail holds over its peers. Section 2 also includes a SWOT analysis to better understand its current positioning.

Section 3 focuses on how Vail creates value. Specifically, Section 3 looks at value created through operations, service, and firm infrastructure. It also conducts a VRIO analysis of tangible and intangible resources to further identify which resources provide sustained competitive advantages.

Section 4 describes the historical trends of Vail’s stock. This section discusses share price movements of MTN, as well as in comparison to its selected peers. Additionally, the history of Vail’s dividend payments and stock repurchases is analyzed.

Section 5 provides a financial analysis of Vail. This section initially focuses on the historical income statements, balance sheets, and statement of cash flows to create ratios that help create an understanding of Vail’s financial performance. Section 5 also analyzes the effect of snow fall on financial performance before comparing Vail to its competitors.

Section 6 creates a valuation of Vail through numerous methods. Initially, Section 6 describes the pro-forma projections that were created as the basis for much of the valuation. This includes five-year projections for the income statement, balance sheet, and free cash flows. The section then focuses on the calculation of the cost of capital which is also used in the process of valuing the company. The three methods used in the valuation are the discounted free cash flows method, adjusted present value method, and the dividend growth model. These come to respective estimated share prices of $213.24, $191.75, and $250.67, compared to Vail stock trading at $236.93 on May 14, 2023.

Section 7 recommends a hold position on Vail stock based on the analysis of this paper. The basis for this recommendation was industry control, profitability, and future growth potential amongst other considerations.

Department

Finance and Marketing

Subjects - Topical (LCSH)

Vail Ski Area (Colo.); Valuation

Geographic Coverage

Vail (Colo.)

Type

Text

Rights

Copying of this document in whole or in part is allowable only for scholarly purposes. It is understood, however, that any copying or publication of this document for commercial purposes, or for financial gain, shall not be allowed without the author’s written permission.

Language

English

Format

application/pdf

Download

Share

COinS