Critical Analysis: Vail Resorts (NYSE:MTN) and Royal Caribbean Cruises (NYSE:RCL)

Royal Caribbean Cruises (NYSE:RCL) and Vail Resorts (NYSE:MTN) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Profitability

This table compares Royal Caribbean Cruises and Vail Resorts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Royal Caribbean Cruises	23.33%	44.68%	10.36%
Vail Resorts	8.94%	32.51%	4.66%

Analyst Recommendations

This is a breakdown of current recommendations for Royal Caribbean Cruises and Vail Resorts, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Caribbean Cruises	0	4	19	1	2.88
Vail Resorts	1	8	4	0	2.23

Royal Caribbean Cruises presently has a consensus price target of $327.68, suggesting a potential upside of 14.50%. Vail Resorts has a consensus price target of $173.73, suggesting a potential upside of 25.74%. Given Vail Resorts’ higher probable upside, analysts plainly believe Vail Resorts is more favorable than Royal Caribbean Cruises.

Risk & Volatility

Royal Caribbean Cruises has a beta of 1.94, indicating that its stock price is 94% more volatile than the S&P 500. Comparatively, Vail Resorts has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Earnings and Valuation

This table compares Royal Caribbean Cruises and Vail Resorts”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Caribbean Cruises	$16.48 billion	4.73	$2.88 billion	$14.87	19.25
Vail Resorts	$2.96 billion	1.67	$280.00 million	$6.82	20.26

Royal Caribbean Cruises has higher revenue and earnings than Vail Resorts. Royal Caribbean Cruises is trading at a lower price-to-earnings ratio than Vail Resorts, indicating that it is currently the more affordable of the two stocks.

Dividends

Royal Caribbean Cruises pays an annual dividend of $4.00 per share and has a dividend yield of 1.4%. Vail Resorts pays an annual dividend of $8.88 per share and has a dividend yield of 6.4%. Royal Caribbean Cruises pays out 26.9% of its earnings in the form of a dividend. Vail Resorts pays out 130.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Royal Caribbean Cruises has increased its dividend for 1 consecutive years and Vail Resorts has increased its dividend for 3 consecutive years. Vail Resorts is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

87.5% of Royal Caribbean Cruises shares are held by institutional investors. Comparatively, 94.9% of Vail Resorts shares are held by institutional investors. 7.0% of Royal Caribbean Cruises shares are held by company insiders. Comparatively, 1.2% of Vail Resorts shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Royal Caribbean Cruises beats Vail Resorts on 13 of the 18 factors compared between the two stocks.

About Royal Caribbean Cruises

Royal Caribbean Cruises Ltd. operates as a cruise company worldwide. The company operates cruises under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands, which comprise a range of itineraries. As of February 21, 2024, it operated 65 ships. Royal Caribbean Cruises Ltd. was founded in 1968 and is headquartered in Miami, Florida.

About Vail Resorts

Vail Resorts, Inc., through its subsidiaries, operates mountain resorts and regional ski areas in the United States. It operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 41 destination mountain resorts and regional ski areas. This segment is also involved in the ancillary activities, including ski school, dining, and retail/rental operations, as well as real estate brokerage activities. The Lodging segment owns and/or manages various luxury hotels and condominiums under the RockResorts brand; other lodging properties; various condominiums located in proximity to the company's mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates owned and managed hotel and condominium units. The Real Estate segment owns, develops, and sells real estate properties. The company was founded in 1845 and is based in Broomfield, Colorado.