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Red Rock (RRR) Stock Up 49% in 3 Months: More Room to Run?

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Red Rock Resorts, Inc. (RRR - Free Report) is poised to benefit from its Las Vegas operations as well as Palace Station and Palms redevelopment projects. Moreover, increased focus on reopening of properties amid the pandemic bodes well. Notably, shares of Red Rock have outperformed the industry in the past three months. The stock has gained 31.9% compared with the industry’s 16.4% growth.

Factors Driving Growth

Red Rock banks heavily on the Palace Station and Palms redevelopment projects. Following the redevelopment in 2018 and 2019, the company witnessed solid top-line growth. Notably, the company is optimistic about its future performance as well.



Apart from this, the company’s Las Vegas operations have been a key growth driver over the past few years, primarily driven by solid performance by both gaming and non-gaming segments. Although the segment’s revenues declined in the second quarter of 2020 due to the coronavirus pandemic, the company is confident about a quick rebound in its Las Vegas business.

The company reopened Green Valley Ranch, Santa Fe Station, Boulder Station, Palace Station and Sunset Station and its Wildfire properties on Jun 4, 2020. However, the openings were subjected to state-mandated occupancy and social-distancing protocols. The company has also reopened other properties.  

Meanwhile, the company stated that it has ample liquidity to satisfy its obligations for the next 12 months. In mid-March, the company withdrew almost the entirety of $997.5 million under its revolving credit facility, out of which $650.0 million was repaid in June 2020. As of Jun 30, 2020, the company had nearly $270.1 million in cash. Moreover, the company’s long-term debt at the end of second-quarter 2020 came in at $3.3 billion compared with $4.1 billion as of Mar 31, 2020. The company had no significant debt maturities until 2025. At the end of second-quarter 2020, the company had a debt-to-capital ratio of 0.9, indicating a manageable debt level.

Red Rock Resorts, which shares space with Boyd Gaming Corporation (BYD - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) in the Zacks Gaming industry, carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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