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Here's Why Red Rock Resorts (RRR) is a Solid Pick for Investors

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Red Rock Resorts, Inc. (RRR - Free Report) is benefiting from improving visitation, cost saving initiatives and increased focus on development projects. We are optimistic about the company’s prospects and believe that the time is right to add the stock to your portfolio as it looks promising and is poised to carry the momentum ahead. Let’s delve deeper and analyze the factors driving the stock.

Price Performance

Shares of this Zacks Rank #1 (Strong Buy) company have soared 246.6% in the past year, outperforming the industry and the S&P 500’s rally of 39.7% and 40.8%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Investment Research
Image Source: Zacks Investment Research

Estimate Revisions & Surprise History

In the past three months, the Zacks Consensus Estimate for Red Rock Resorts’ second-quarter 2021 earnings has increased 123.1%. The consensus mark for third-quarter 2021 earnings has been revised upward by 52.9% over the same time frame. The favorable estimate revisions instill investor confidence in the stock. Earnings for 2021 are likely to witness growth of 102.8% year over year.

Red Rock Resorts has beat earnings estimates in each of the trailing four quarters, the average surprise being 166.2%.

Growth Drivers

Red Rock Resorts is witnessing robust visitation from a younger demographic. The company informed that it is witnessing increased spend per visit and more time spent on device. It is benefiting from roll out of vaccines, easing of capacity restrictions from 25% to 50% on Mar 15, 2021 and federal stimulus money. It anticipates returning to 100% occupancy.

During first-quarter 2021, the company’s performance gained from a number of initiatives — streamlining of operations, optimization of marketing initiatives, and renegotiating vendor and third-party agreements. Backed by these initiatives, the company now expects to save more than $200 million in annual costs, up from the prior estimate of $150 million. Going forward, the initiatives are not only going to support efficient production but are also likely to drive margins and free cash flow.

Las Vegas operations have been a key growth driver over the past few quarters and the trend is likely to continue in the coming quarters. The company is bullish on long-term view thanks to favorable supply-demand dynamic, positive long-term trends in population growth and stable regulatory environment. Attributes such as best-in-class assets and locations, unparallel distribution and scale along with solid organic development pipeline are other positives.

Other Key Picks

Some other top-ranked stocks, which warrant a look in the same space include Boyd Gaming Corporation (BYD - Free Report) , Golden Entertainment, Inc. (GDEN - Free Report) and Penn National Gaming, Inc. (PENN - Free Report) . While Boyd Gaming and Red Rock sport a Zacks Rank #1, Penn National Gaming carries a Zacks Rank #2 (Buy).

Boyd Gaming has a three-five-year earnings per share growth rate of 19.8%.

Golden Entertainment earnings in 2021 is expected to witness growth of 128%.

Penn National’s 2021 earnings are anticipated to surge 157.2%.