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Why Is Red Rock Resorts (RRR) Up 17.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for Red Rock Resorts (RRR - Free Report) . Shares have added about 17.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Red Rock Resorts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Red Rock Resorts Q1 Earnings & Revenues Top Estimates

Red Rock Resorts reported first-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Notably, the metrics surpassed the consensus estimate for the fourth straight quarter.

Management stated that, during the first quarter, the company maintained its reopening program. Moreover, the company operated its first-to-reopen properties of Red Rock, Green Valley Ranch, Santa Fe Station, Boulder Station, Palace Station and Sunset Station and Wildfire Properties.

Earnings & Revenues

In the quarter under review, adjusted earnings per share was 98 cents, which comfortably surpassed the Zacks Consensus Estimate of 23 cents. In the prior-year quarter, the company had reported adjusted loss of 11 cents per share.

Revenues of $352.6 million beat the consensus mark of $328.8 million by 7.2%. However, the top line declined 6.6% on a year-over-year basis primarily due to the pandemic.

Notably, adjusted EBITDA during this period increased 110.8%, while adjusted EBITDA margin rose 2,470 basis points from the prior-year quarter to 44.4% year over year.

Segmental Details

Las Vegas Operations: Revenues at the segment totaled $342.8 million, down 3.8% year over year primarily owing to the pandemic. However, adjusted EBITDA increased 134.6% from the prior-year quarter’s figure to $160.7 million.

Native American Management: Revenues at the segment declined 58% year over year to $8.1 million. Meanwhile, adjusted EBITDA fell 56.8% from the prior-year quarter’s figure to $7.6 million.

Other Financial Details

As of Mar 31, 2021, Red Rock Resorts had cash and cash equivalent of $117.9 million. Outstanding debt at the end of the first quarter was $2.9 billion.

Other Development

On May 4, 2021, the company announced that its subsidiary Station Casinos LLC came in to an agreement with a subsidiary of the San Manuel Band of Mission Indians (“San Manuel”) to sell the Palms Casinos Resort. The cash value of the transaction is $650 million and is subject to regulatory approvals and other customary closing conditions.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 78.18% due to these changes.

VGM Scores

At this time, Red Rock Resorts has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Red Rock Resorts has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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