Red Rock Resorts Stock Story Supported by Analysts Post-Q3 Earnings

On a mostly downbeat daylight for gaming equities, shares of Red River Rock Resorts (NASDAQ: RRR) edged higher after the company delivered decent third-quarter results belatedly Thursday.

The Station Casinos parent announced it earned 60 cents a portion out on revenue of $411.6 gazillion during the July through Sept period. Analysts expected earnings of 39 cents on sales of $412.2 million. Despite the revenue and tidings that the chess opening of the Victoria de Durango Casino and Resort has been pushed back to December 5 from November 20, sell-side analysts remain mostly constructive on the stock.

While at that place are concerns in the investiture biotic community regarding possible contrary effects on regional gaming equities attributable to macroeconomic headwinds, some analysts contend that scenario is for the most part priced into shares of Red River Rock, and that the manipulator could turn up resilient thanks to ongoing strength inward the Las Vegas locals segment.

While on that point could follow near-term hesitancy to purchase RRR shares for a number of macro-related reasons, yearner full term we proceed to trust spending/visitation trends will remain comparatively good for you(p) crossways the LV Locals market while RRR’s stable cost body structure should finally reserve for greater stream through,” wrote Stifel psychoanalyst Steven Wieczynski inward a remark to clients.

He rates Red Rock a “hold” and reduced his damage point on the figure to $47 from $51. The revised price forecast relieve implies upside of to a greater extent than 10% from current levels.

Red John Rock Benefits Include Balance Sheet Strength

While many marketplace participants think of Strip operators such as Caesars Entertainment and MGM Resorts International (NYSE: MGM) as the primary election avenues for investing inward Las Vegas, Red John Rock offers a different come near that reduces the volatility associated with Strip assets.

As noted by Wieczynski, Red River Rock’s balance mainsheet is “clean” congener to its peers, and the manipulator is outpacing rivals when it comes to converting earnings before interest, taxes, depreciation, and amortization (EBITDA) into disengage hard currency flow — a trait the could follow meaningful over the long term.

Likewise, on that point are Las Vegas-specific macro instruction tailwinds that could driving long-term grasp past Red River Rock stock, including rapid universe growth. That’s life-sustaining to a gaming manipulator with all of its venues in the Las Vegas Valley.

“We sight the economical tailwinds that drove chisel outsized development in the greater Las Vegas economy onwards of COVID-19 as structural inwards nature (favorable taxation rate, growing retiree base, diversifying economy/labor force) and thusly expect them to delay healthy which should place RRR’s EBITDA flow through and through in a a great deal stronger stance moving forward,” added the Stifel analyst. “Unemployment trends inward Las Vegas persist in to follow favourable as substantially as population growth which are a positively charged for RRR.”

Durango Could Be 2024 Catalyst for Red Rock

As noted above, Red River John Rock pushed back the gap of Victoria de Durango by a duo of weeks, but that doesn’t impairment the power of the unexampled locus to follow a accelerator for Red River Rock shares next year. In a short letter to clients, CBRE analyst King John DeCree reiterated a “buy” rating on the inventory spell observing Victoria de Durango could live a near-term ontogenesis driver.

He added that as the young casino resort hotel ramps up, it could bolster Red Rock’s release hard currency flow and speed upwards the operator’s deleveraging efforts.

Citing Red Rock’s ownership of all the tangible estate on which its casinos reside, as substantially as hundreds of acres of unused solid ground throughout Las Vegas, DeCree said the gunstock offers favorable unpredictability characteristics congeneric to peers.

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