GICS Sector : Consumer Cyclical
Red Rock Resorts, Inc., through its interest in Station Holdco and Station LLC, develops and operates casino and entertainment properties in the United States.It operates through two segments, Las Vegas Operations and Native American Management.The company owns and operates 9 gaming and entertainment facilities, and 10 smaller casinos in the Las Vegas regional market.
Red Rock Resorts reported exceptional fourth-quarter results, with Las Vegas operations setting new records for net revenue and adjusted EBITDA while maintaining near-record adjusted EBITDA margin. The company's Las Vegas operations reported fourth-quarter net revenue of $505 million, up 2.5% from the prior year, and adjusted EBITDA of $231 million, up 3.2% from the prior year. For the full year, net revenue was just under $2 billion, up 2.9% from the prior year, and adjusted EBITDA was $915.9 million, up 4.2% from the prior year. The company's earnings per share (EPS) came in at $0.75, significantly beating estimates of $0.41. The strong financial performance was driven by the company's locals market focus and its diversified portfolio of properties.
Publication Date: Feb -15
The company's Durango Casino Resort continues to expand the locals market and drive incremental play from its existing customer base, reinforcing its position as a meaningful growth driver within the company's portfolio. The latest expansion added 25,000 square feet of new casino space, including a high-limit slot area and a covered parking garage. The company's investment in high-limit rooms and high-net-worth customers has contributed to this growth, as well as the quality of its assets, which offers a compelling experience compared to the strip.
Looking ahead, the company remains focused on executing its development pipeline, maintaining operating discipline, and delivering enhanced shareholder returns through a balanced, consistent, and disciplined capital allocation strategy. The company's $385 million expansion at Durango is expected to generate returns in the low teens, growing to mid-teens and eventually reaching 20%. However, the disruption at Durango is expected to be short-term, lasting around 16 months, and is primarily due to roadwork and construction. Analysts estimate next year's revenue growth at 4.7%.
The company's current valuation metrics are as follows: P/E Ratio of 19.22, P/B Ratio of 16.46, P/S Ratio of 1.81, EV/EBITDA of 8.64, Dividend Yield of 3.26%, Free Cash Flow Yield of 8.21%, ROIC of 13.88%, ROE of 84.99%, and Net Debt / EBITDA of 4.09. The company's strong financial performance and growth prospects are reflected in its valuation metrics, which indicate a premium valuation. However, the company's dividend yield provides a relatively stable source of return for investors.
The company's Board of Directors has declared a special cash dividend of $1 per Class A common share, reflecting the continued strength the company is seeing in its business and the confidence it has in the long-term earnings power of its operating model. The company's management is confident in its ability to continue growing its Las Vegas EBITDA base in 2026 despite potential disruption at its Durango property. The company's locals market focus, driven by local repeat customers, makes it recession-resistant compared to the strip.
Cookson Peirce & Co. Inc. Invests $1.20 Million in Red Rock Resorts, Inc. $RRR
Feb -14
Red Rock Resorts, Inc. (RRR) Q4 2025 Earnings Call Transcript
Feb -11
Red Rock Resorts (RRR) Q4 Earnings: How Key Metrics Compare to Wall Street Estimates
Feb -10
Red Rock Resorts (RRR) Tops Q4 Earnings and Revenue Estimates
Feb -10
Red Rock Resorts Announces Fourth Quarter and Full Year 2025 Results
Feb -10
Red Rock Resorts, Inc. (NASDAQ:RRR) Given Average Recommendation of “Moderate Buy” by Brokerages
Feb -09
Universal Beteiligungs und Servicegesellschaft mbH Buys Shares of 10,085 Red Rock Resorts, Inc. $RRR
Feb -03
Red Rock Resorts (NASDAQ:RRR) Share Price Passes Above 200-Day Moving Average – Here’s What Happened
Jan -27
Las Vegas Operations' 6% growth driven by increasing visitation and spending from tourists, locals, and convention attendees. Strong demand for luxury experiences, new amenities, and renovated properties. Effective marketing strategies, loyalty programs, and operational efficiencies also contribute to growth.
Red Rock Resorts' Corporate and Other segment growth of 6% is driven by increased management fees from Native American gaming partnerships, higher revenue from the company's interactive business, and cost savings initiatives. Additionally, the company's focus on enhancing its loyalty program and improving operational efficiencies also contributed to the growth.
Luxury resorts and casinos offering gaming, dining, and entertainment experiences
Luxurious hotel rooms and suites with modern amenities and exceptional service
Upscale restaurants, bars, and lounges offering a range of cuisines and atmospheres
State-of-the-art gaming facilities, live entertainment, and nightlife options
Customizable event spaces and services for corporate meetings, weddings, and social events
Luxurious spa facilities and wellness programs for relaxation and rejuvenation
The threat of substitutes for Red Rock Resorts, Inc. is medium due to the presence of alternative entertainment options such as online gaming and other leisure activities.
The bargaining power of customers for Red Rock Resorts, Inc. is high due to the high demand for luxury experiences and the ability of customers to choose from various alternatives.
The bargaining power of suppliers for Red Rock Resorts, Inc. is low due to the company's large scale of operations and its ability to negotiate favorable terms with suppliers.
The threat of new entrants for Red Rock Resorts, Inc. is low due to the high barriers to entry in the gaming and hospitality industry, including the need for significant capital investment and regulatory approvals.
The intensity of rivalry for Red Rock Resorts, Inc. is high due to the competitive nature of the gaming and hospitality industry, with many established players competing for market share.
| Value | |
|---|---|
| Debt Weight | 95.31% |
| Debt Cost | 6.00% |
| Equity Weight | 4.69% |
| Equity Cost | 14.33% |
| WACC | 6.39% |
| Leverage | 2032.85% |
Value: 5.6
Growth: 5.2
Quality: 7.8
Yield: 7.0
Momentum: 7.0
Volatility: 6.0
1-Year Total Return ->
Value: 6.5
Growth: 7.2
Quality: 6.5
Yield: 1.0
Momentum: 7.0
Volatility: 8.0
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Value: 4.0
Growth: 5.9
Quality: 6.4
Yield: 8.0
Momentum: 3.0
Volatility: 6.7
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Value: 4.3
Growth: 8.9
Quality: 5.5
Yield: 0.0
Momentum: 1.5
Volatility: 7.7
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Value: 7.4
Growth: 5.7
Quality: 4.0
Yield: 6.0
Momentum: 1.0
Volatility: 3.3
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Value: 4.2
Growth: 7.6
Quality: 2.6
Yield: 0.0
Momentum: 4.0
Volatility: 5.7
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