Peak Resorts is a a well established and fairly stable owner and operator of smaller ski resorts that cater to day and overnight skiers.
The company was started in the early 1980′s by the current CEO who was in the golf course business and wanted to find something to do in the winter months.
Peak has grown based on measured acquisition strategy. They buy properties and then use operational initiatives to increase margins.
Currently the company has 12 ski areas in the midwestern, north and south eastern US serving just under 2 millions skiers per year.
Revenues are about $100M with $25M in EBITDA. Post-IPO the company plans to institute a dividend which will provide a 4% yield depending on the IPO price.
Key Positive, Neutral and Negative Factors
+ Peak has developed some core skills in snow making and running services efficiently for the day and overnight skiing market.
+ The addition of “terrain parks” brings skiers to properties more regularly and reduces the need for ideal snow conditions. Peak properties are also close enough to major metropolitan areas so that skiers can make last minute decisions to ski based on weather conditions.
+ Specializing in the day and overnight skiing markets allows Peak to operate with little direct competition since Vail Resorts concentrates on longer-stay “destination” properties. Optimizing typical bottlenecks like equipment rentals and food service improves customer experience and operational efficiency.
+ Strong financial and operating ability gives Peak an advantage in purchasing and consolidating new properties. Fragmented market and lack of easy financing favors more established players like Peak.
+ Management team has been together for a decade and has a very steady and disciplined approach to growing the business.
= Peak has limited exposure to real estate but is beginning to increase this exposure with high potential properties like Mt. Snow in Vermont.
= Financials are very seasonal which is a minor negative but the high rate of season pass sales gives the company 30% of their lift ticket revenue before the season opens.
= Company is at least aware of the potential for social media and a more externalized approach to marketing. Too soon to know if they can use them to drive business results.
- Some investors put a lower multiple on acquisition-based growth stories. Direct comparable companies like Vail Resorts (NYSE: MTN) and Whistler Blackcomb (TSE: WB) have not been great stocks.
Valuation
At $17/share the market capitalization of PEAK will be $152M to $164M depending upon the over-allotment option exercise. Adding in the debt will put the EV at about $250M or 2.5x trailing sales and 10x trailing EBITDA.
