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Should We Worry About Vail Resorts, Inc.'s (NYSE:MTN) P/E Ratio?

Simply Wall St


This article is written for those who want to get better at using price to earnings ratios (P/E ratios). We'll look at Vail Resorts, Inc.'s (NYSE:MTN) P/E ratio and reflect on what it tells us about the company's share price. Vail Resorts has a price to earnings ratio of 31, based on the last twelve months. That means that at current prices, buyers pay $31 for every $1 in trailing yearly profits.

See our latest analysis for Vail Resorts

How Do I Calculate A Price To Earnings Ratio?

The formula for P/E is:


Or for Vail Resorts:

P/E of 31 = $235.66 ÷ $7.6 (Based on the trailing twelve months to April 2019.)

Is A High Price-to-Earnings Ratio Good?

A higher P/E ratio means that buyers have to pay a higher price for each $1 the company has earned over the last year. That is not a good or a bad thing per se, but a high P/E does imply buyers are optimistic about the future.

How Growth Rates Impact P/E Ratios


Vail Resorts saw earnings per share decrease by 25% last year. But it has grown its earnings per share by 44% per year over the last five years.

How Does Vail Resorts's P/E Ratio Compare To Its Peers?

The P/E ratio essentially measures market expectations of a company. As you can see below, Vail Resorts has a higher P/E than the average company (22.8) in the hospitality industry.

NYSE:MTN Price Estimation Relative to Market, June 20th 2019





Vail Resorts's Balance Sheet

Vail Resorts has net debt worth 14% of its market capitalization. That's enough debt to impact the P/E ratio a little; so keep it in mind if you're comparing it to companies without debt.

The Bottom Line On Vail Resorts's P/E Ratio

Vail Resorts has a P/E of 31. That's higher than the average in the US market, which is 17.9. With a bit of debt, but a lack of recent growth, it's safe to say the market is expecting improved profit performance from the company, in the next few years.



