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.
The company's third-quarter net revenue was $468.6 million, up almost 1% from the prior year's third quarter, while adjusted EBITDA was $209.4 million, up 3.4% from the prior year's third quarter. The adjusted EBITDA margin was 44.7%, an increase of 110 basis points from the prior year. Earnings per share came out at $1.21, significantly higher than the estimated $0.36. The strong financial performance was driven by the Las Vegas operations, which set new records for net revenue and adjusted EBITDA.
Publication Date: Nov -13
Durango Casino Resort continues to expand the Las Vegas locals market, drive incremental play from the existing customer base, and attract new guests to the Station Casinos brand. The company is now turning its attention to the next phase of Durango's master plan, which will expand the podium along the north side of the existing facility by more than 275,000 square feet. According to Lorenzo Fertitta, "we expect to get similar returns on the expansion that we have gotten so far on the initial build."
With a P/E Ratio of 14.45 and an EV/EBITDA of 4.23, the company's valuation appears reasonable. The Dividend Yield is 3.43%, indicating a decent return for income-seeking investors. The company's ROIC is 15.41%, suggesting a strong ability to generate returns on invested capital.
The company remains confident in the strength and resilience of its business and the long-term growth prospects. The Durango expansion is expected to drive additional traffic and guests, while the North Fork facility is on track for an early fourth quarter 2026 opening. Analysts estimate next year's revenue growth at 3.4%, indicating a steady increase in top-line performance.
The Board of Directors has approved an increase in the regular quarterly cash dividend, reflecting the company's continued strength and long-term earnings power. The company has also returned approximately $221 million to shareholders year-to-date through dividends and share repurchases.
The company is making progress on its development pipeline, with the North Fork facility expected to open in Q4 2026. The total all-in project cost remains approximately $750 million, fully financed and being executed under a guaranteed maximum price contract. According to Scott Kreeger, "we're as bullish as we've ever been relative to the future development of the company and our ability to generate returns."
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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: 6.2
Growth: 7.3
Quality: 6.6
Yield: 1.0
Momentum: 8.5
Volatility: 8.0
1-Year Total Return ->
Value: 4.7
Growth: 5.2
Quality: 5.5
Yield: 7.0
Momentum: 6.5
Volatility: 5.7
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Value: 3.7
Growth: 5.9
Quality: 5.5
Yield: 8.0
Momentum: 3.0
Volatility: 7.0
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Value: 6.7
Growth: 5.8
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Momentum: 3.5
Volatility: 4.7
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Value: 4.3
Growth: 8.9
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Volatility: 7.3
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Value: 4.4
Growth: 7.7
Quality: 2.4
Yield: 0.0
Momentum: 3.5
Volatility: 5.7
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