NEW YORK (TheStreet) -- Shares of Vail Resorts Inc (MTN) are surging, up 8.51% to $83.30, on nearly four times normal trading volume today after the company acquired Park City Mountain Resort from Powdr Corp. for $182.5 million in cash.
The sale ends a legal battle concerning a late renewal of Powdr's long-term lease with its landowner, Talisker Land Holdings, for more than 2,800 acres dating back to the 1970s.
Vail Resorts said that with the acquisition all litigation with Park City Mountain Resort has been settled.
The Utah ski company also announced that due to the new deal, it expects $35 million in incremental EBITDA in its fiscal year 2015, and anticipates significant tax benefits over the next 15 years including about $12 million in additional annual taxable depreciation and amortization expense.
Separately, TheStreet Ratings team rates VAIL RESORTS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate VAIL RESORTS INC (MTN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 15.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.31, which illustrates the ability to avoid short-term cash problems.
- 43.85% is the gross profit margin for VAIL RESORTS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.71% is above that of the industry average.
- Net operating cash flow has slightly increased to $131.58 million or 9.58% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.13%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 20.8% when compared to the same quarter one year prior, going from $97.64 million to $117.95 million.You can view the full analysis from the report here: MTN Ratings Report
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