Send me real-time posts from this site at my email
Motley Fool

Why Vail Resorts Jumped 13% in August

What happened

Shares of Vail Resorts (NYSE: MTN) jumped 13.4% in August, according to data from S&P Global Market Intelligence.

That move brought the stock's year-to-date loss to just 8.1%. For context, Vail's stock had been down as much as 44% year to date in early April when uncertainty around COVID-19 was at its peak.

In August, Vail Resorts announced its plans for the 2020/2021 ski and snowboard season, which include a comprehensive focus on safety. It also released a letter from Vail Resorts CEO Rob Katz about the company's 2020/2021 winter operating plan.

Image source: Getty Images.

Some of the components of the operating plan are:

  • Guests will be required to wear face coverings in every part of the company's operations. That includes while loading and riding in chairlifts and gondolas, while inside all buildings, and during all ski and snowboard lessons. In short, no one will be allowed on any of the company's mountains without a face covering.
  • The company will be enforcing physical distancing on its mountains, which will require limiting the number of guests. To allow this, the company will have a reservation system at each of its mountains. It will also enforce limitations on chairlifts and gondolas and physical distancing at its on-mountain restaurants.
  • There will be health screenings for all participants -- both employees and customers -- of the ski and ride school. Group lesson sizes will be limited to six, and all lessons will need to be purchased in advance.

Market sentiment toward many travel, leisure, and economic recovery stocks also improved during August. For example, shares of Expedia (NASDAQ: EXPE), Booking Holdings (NASDAQ: BKNG), and Six Flags Entertainment (NYSE: SIX) appreciated 21.2%, 14.9%, and 25%, respectively, during August. That sentiment improvement likely contributed to some of Vail's share price strength in the month.

So what

During March and April, there was tremendous uncertainty about COVID-19 and its impact on the global and U.S. economy. When the latter part of the 2019/2020 ski and snowboard season at Vail's mountains was canceled early, the duration and severity of the COVID-19 pandemic was extremely uncertain. It was possible the 2020/2021 ski and snowboard season would be canceled as well.

Vail announcing its operating plan for the 2020/2021 season provides more certainty about the business this winter. Investors will have to wait to see how Vail performs financially this winter, but the fact that there are concrete plans to have a ski and snowboard season at all has likely helped boost sentiment toward the stock.

Now what

Because so much of the company's business occurs in the winter months, the most we can do now is watch how COVID-19 and economic developments play out in the coming months.

Vail Resorts reports its fiscal fourth-quarter earnings results on Sept. 24, during which management will surely elaborate on its winter season plans. Investors should tune in.

10 stocks we like better than Vail Resorts
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Vail Resorts wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 1, 2020

Andrew Tseng has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Booking Holdings. The Motley Fool recommends Vail Resorts. The Motley Fool has a disclosure policy.


Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue