We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Red Rock Resorts Rises 15% in 3 Months: How to Play the Stock?
Read MoreHide Full Article
In the past three months, Red Rock Resorts, Inc. (RRR - Free Report) shares have gained 14.9%, underperforming the Zacks Gaming industry while riding above the Zacks Consumer Discretionary sector and the S&P 500 Index. During the same time frame, the industry, the sector and the S&P 500 Index grew 17.3%, 4.7% and 6.3%, respectively.
Price Performance
Image Source: Zacks Investment Research
The company’s ongoing Durango expansion project, along with its focus on operational discipline and opportunities to improve efficiency, continues to drive growth.
During the first half of 2024, RRR witnessed increased visitation numbers and net theoretical wins thanks to the Durango property. So, based on these upward trends, it decided to expand the Durango property by adding over 25,000 square feet of additional casino space, including a new high-limit slot and bar area which will incorporate additional 230 slot machines to the casino floor, including 120 slot machines dedicated to its new high-limit room. RRR believes that this expansion initiative will expand its profit margin in the medium and the long term.
Additionally, RRR is also optimistic about favorable trends in its hotel division thanks to the increasing occupancy and average daily rate across the hotel portfolio. For the upcoming quarters, the company expects to witness stability in the locals market and across its card database, thus, possible growth prospects for its business.
RRR Trading Above 50 & 200-Day Moving Average
Despite the recent decline, technical indicators suggest continued strong performance for Red Rock Resorts. From the graphical representation given below, it can be observed that the RRR stock is riding above its 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in RRR’s financial health and prospects.
Image Source: Zacks Investment Research
Red Rock Resorts' Stock Pulls Back
In the past month, shares of RRR have dwindled 3.2% compared with the industry’s 0.3% decline, the sector’s 3.4% growth and the S&P 500 Index’s 2.8% gain.
The optimism regarding the prospects of Red Rock Resorts might have been under question after the bottom line reported in the recent earnings results declined year over year. The company’s bottom line was hurt due to the increased expense structure driven by the ongoing Durango expansion project. Year to date, RRR witnessed a hike in its casino, food and beverage, and room expenses due to the increased expense scenario at the project related to these aspects. Also, during the same time frame, the selling, general and administrative (SG&A) expenses increased year over year to $216.1 million from $186 million.
The expense increase trajectory is quite alarming for the company’s near-term prospects, which is indeed hurting investor’s sentiments.
RRR’s Estimate Revision Trend Signaling Downturn
The Zacks Consensus Estimate for Red Rock Resorts’ 2024 earnings per share (EPS) has trended downward to $1.66 from $1.82 over the past 60 days. The estimated figure indicates a 43.5% decline in growth from the prior year’s reported levels. Over the said time frame, the consensus estimate for third-quarter 2024 EPS also declined to 39 cents from 44 cents, indicating a 35% year-over-year decline. This declining trend induces concern among investors regarding the RRR stock’s growth potential.
Image Source: Zacks Investment Research
RRR is Trading at a Premium
Red Rock Resorts is currently trading at a premium to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. RRR’s forward 12-month P/E ratio stands at 29.67X, higher than the industry’s ratio of 27.85X. This indicates that despite the recent stock price decline in the past month, the stock is expensive on a relative basis.
Image Source: Zacks Investment Research
Is it Profitable to Include RRR in Your Portfolio?
Red Rock Resorts is making effective efforts to increase the prospects of its long-term growth, substantiated by the Durango expansion project. Also, increased visitation and card slot play, along with upward demand trends across its hotel division, is encouraging. However, RRR’s core strategy of reinvesting in existing properties is inflating the expense structure. The upsurge in expenses is directly hurting its bottom line, which is demotivational across the industry.
In the context of the other industry players, including DraftKings Inc. (DKNG - Free Report) , PENN Entertainment, Inc. (PENN - Free Report) and Boyd Gaming Corporation (BYD - Free Report) , RRR has only outperformed DKNG in the past three months and slid below the other two players. In the said time frame, shares of DKNG have lost 1.8%, while the shares of PENN and BYD have gained 28.6% and 18.5%, respectively.
Image Source: Zacks Investment Research
From the above discussion, it can be concluded that this Zacks Rank #3 (Hold) company is sending mixed signals regarding its prospects. RRR is currently trading at a premium compared to its industry peers, and its earnings estimates have been revised downward, reflecting concerns about near-term growth. That said, the stock is riding above its 50 and 200-day moving average, inducing bullish sentiments. It is advised to the existing investors to hold onto Red Rock Resorts shares for now, despite the recent challenges. On the other hand, potential new investors might want to wait before jumping in right away.
Image: Bigstock
Red Rock Resorts Rises 15% in 3 Months: How to Play the Stock?
In the past three months, Red Rock Resorts, Inc. (RRR - Free Report) shares have gained 14.9%, underperforming the Zacks Gaming industry while riding above the Zacks Consumer Discretionary sector and the S&P 500 Index. During the same time frame, the industry, the sector and the S&P 500 Index grew 17.3%, 4.7% and 6.3%, respectively.
Price Performance
Image Source: Zacks Investment Research
The company’s ongoing Durango expansion project, along with its focus on operational discipline and opportunities to improve efficiency, continues to drive growth.
During the first half of 2024, RRR witnessed increased visitation numbers and net theoretical wins thanks to the Durango property. So, based on these upward trends, it decided to expand the Durango property by adding over 25,000 square feet of additional casino space, including a new high-limit slot and bar area which will incorporate additional 230 slot machines to the casino floor, including 120 slot machines dedicated to its new high-limit room. RRR believes that this expansion initiative will expand its profit margin in the medium and the long term.
Additionally, RRR is also optimistic about favorable trends in its hotel division thanks to the increasing occupancy and average daily rate across the hotel portfolio. For the upcoming quarters, the company expects to witness stability in the locals market and across its card database, thus, possible growth prospects for its business.
RRR Trading Above 50 & 200-Day Moving Average
Despite the recent decline, technical indicators suggest continued strong performance for Red Rock Resorts. From the graphical representation given below, it can be observed that the RRR stock is riding above its 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in RRR’s financial health and prospects.
Image Source: Zacks Investment Research
Red Rock Resorts' Stock Pulls Back
In the past month, shares of RRR have dwindled 3.2% compared with the industry’s 0.3% decline, the sector’s 3.4% growth and the S&P 500 Index’s 2.8% gain.
The optimism regarding the prospects of Red Rock Resorts might have been under question after the bottom line reported in the recent earnings results declined year over year. The company’s bottom line was hurt due to the increased expense structure driven by the ongoing Durango expansion project. Year to date, RRR witnessed a hike in its casino, food and beverage, and room expenses due to the increased expense scenario at the project related to these aspects. Also, during the same time frame, the selling, general and administrative (SG&A) expenses increased year over year to $216.1 million from $186 million.
The expense increase trajectory is quite alarming for the company’s near-term prospects, which is indeed hurting investor’s sentiments.
RRR’s Estimate Revision Trend Signaling Downturn
The Zacks Consensus Estimate for Red Rock Resorts’ 2024 earnings per share (EPS) has trended downward to $1.66 from $1.82 over the past 60 days. The estimated figure indicates a 43.5% decline in growth from the prior year’s reported levels. Over the said time frame, the consensus estimate for third-quarter 2024 EPS also declined to 39 cents from 44 cents, indicating a 35% year-over-year decline. This declining trend induces concern among investors regarding the RRR stock’s growth potential.
Image Source: Zacks Investment Research
RRR is Trading at a Premium
Red Rock Resorts is currently trading at a premium to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. RRR’s forward 12-month P/E ratio stands at 29.67X, higher than the industry’s ratio of 27.85X. This indicates that despite the recent stock price decline in the past month, the stock is expensive on a relative basis.
Image Source: Zacks Investment Research
Is it Profitable to Include RRR in Your Portfolio?
Red Rock Resorts is making effective efforts to increase the prospects of its long-term growth, substantiated by the Durango expansion project. Also, increased visitation and card slot play, along with upward demand trends across its hotel division, is encouraging. However, RRR’s core strategy of reinvesting in existing properties is inflating the expense structure. The upsurge in expenses is directly hurting its bottom line, which is demotivational across the industry.
In the context of the other industry players, including DraftKings Inc. (DKNG - Free Report) , PENN Entertainment, Inc. (PENN - Free Report) and Boyd Gaming Corporation (BYD - Free Report) , RRR has only outperformed DKNG in the past three months and slid below the other two players. In the said time frame, shares of DKNG have lost 1.8%, while the shares of PENN and BYD have gained 28.6% and 18.5%, respectively.
Image Source: Zacks Investment Research
From the above discussion, it can be concluded that this Zacks Rank #3 (Hold) company is sending mixed signals regarding its prospects. RRR is currently trading at a premium compared to its industry peers, and its earnings estimates have been revised downward, reflecting concerns about near-term growth. That said, the stock is riding above its 50 and 200-day moving average, inducing bullish sentiments. It is advised to the existing investors to hold onto Red Rock Resorts shares for now, despite the recent challenges. On the other hand, potential new investors might want to wait before jumping in right away.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.