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Here's Why You Should Retain Red Rock Resorts (RRR) Stock Now
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Red Rock Resorts, Inc. (RRR - Free Report) will likely benefit from solid Las Vegas operations, strong visitation and the Durango project. Also, focus on new amenities bodes well. However, an uncertain macroeconomic environment and inflationary pressures are a concern.
Let us delve into the factors that highlight why investors should retain the stock for now.
Factors Driving Growth
Red Rock Resorts’ Las Vegas operations have been a key growth driver in the past few quarters and the trend will likely continue in the upcoming quarters. During the fourth quarter of 2023, revenues from Las Vegas operations came in at $459.4 million, up 9.5% from $419.6 million in the prior-year quarter. Adjusted EBITDA was $220.3 million, up 6.5% year over year.
The company is bullish about its long-term view, owing to favorable supply-demand dynamic, positive long-term trends in population growth and a stable regulatory environment. Attributes, such as best-in-class assets and locations, unparalleled distribution and scale and a solid organic development pipeline are likely to add to the positives.
RRR is witnessing favorable customer trends, following the reopening of most of its properties. During the fourth quarter of 2023, the company witnessed consistent visitation from its guests and strong spending per visit across its portfolio. Attributes, such as consistent visitation from guests, increased spending per visit, more time spent on gaming devices and a return of core customers, have added to the positives. The company reported growth in food and beverage and hotel segments fueled by the strength in the catering business. The company intends to focus on business optimization and cost-reduction measures to drive growth.
Also, the emphasis on the expansion of new amenities bodes well. During second-quarter 2023, the company announced the opening of Polaris, a high-end casino bar located (at Green Valley Ranch Resort) and reported solid customer feedback with respect to the same. During the third-quarter 2023 earnings call, the company announced the successful opening of Stoney's North Forty bar, a new poker room and a new high-limit slot room in its Santa Fe Station property, along with Game On sports bar in its Boulder Station property.
Red Rock Resorts also stated the opening of a new high-limit table room at Green Valley Ranch property. Given the successful openings of high-limit tables and slot rooms, a new casino bar and a Red Rock Casino Resort, the company remains optimistic and intends to boost investments in this direction. This is likely to pave the path for growth in the upcoming periods.
RRR continues to focus on development projects to drive growth. During fourth-quarter 2023, the company unveiled Durango Casino & Resort and reported solid feedback concerning the same. Located off the 215 Expressway and Durango Drive in Southwest Las Vegas Valley, the new venue taps into one of the area's most rapidly expanding regions, characterized by a favorable demographic profile and limited competition within a five-mile radius.
Despite being in its early stages, the resort's debut has been well-received, resulting in an expanded market and the attraction of new customers to the company's brand. Going forward, Red Rock Resorts remains optimistic in this regard. Attributes of long-term demographic growth of the Las Vegas Valley and the proximity of the properties to high-growth areas (within the valley) are likely to add to the positives.
Image Source: Zacks Investment Research
Shares of Red Rock Resorts have gained 12.3% year to date compared with the industry’s 10% growth.
Concerns
The rise in labor and commodity costs continues to hurt the company. During the fourth quarter, RRR witnessed the impacts of inflation and increased energy costs. It also reported elevated prices concerning food and beverage and rooms. During the fourth quarter, selling, general and administrative expenses came in at $96.7 million compared with $85 million reported in the prior-year quarter. During the quarter, food and beverage expenses increased 15.3% year over year to $85.1 million. Rooms expenses were up 17.7% year over year to $52.2 million. The company is cautious of an uncertain economic environment, which may affect its results in the near term.
Zacks Rank and Stocks to Consider
Red Rock Resorts currently carries a Zacks Rank #3 (Hold).
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have surged 120.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Trip.com Group Limited (TCOM - Free Report) currently carries a Zacks Rank #2 (Buy). TCOM has a trailing four-quarter earnings surprise of 53.1%, on average. Shares of TCOM have gained 27.5% in the past year.
The Zacks Consensus Estimate for TCOM’s 2024 sales and EPS indicates a rise of 18.2% and 8%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2 at present. It has a trailing four-quarter earnings surprise of 17.8%, on average. Shares of H have rallied 44.1% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.5% and 27%, respectively, from the year-ago levels.
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Here's Why You Should Retain Red Rock Resorts (RRR) Stock Now
Red Rock Resorts, Inc. (RRR - Free Report) will likely benefit from solid Las Vegas operations, strong visitation and the Durango project. Also, focus on new amenities bodes well. However, an uncertain macroeconomic environment and inflationary pressures are a concern.
Let us delve into the factors that highlight why investors should retain the stock for now.
Factors Driving Growth
Red Rock Resorts’ Las Vegas operations have been a key growth driver in the past few quarters and the trend will likely continue in the upcoming quarters. During the fourth quarter of 2023, revenues from Las Vegas operations came in at $459.4 million, up 9.5% from $419.6 million in the prior-year quarter. Adjusted EBITDA was $220.3 million, up 6.5% year over year.
The company is bullish about its long-term view, owing to favorable supply-demand dynamic, positive long-term trends in population growth and a stable regulatory environment. Attributes, such as best-in-class assets and locations, unparalleled distribution and scale and a solid organic development pipeline are likely to add to the positives.
RRR is witnessing favorable customer trends, following the reopening of most of its properties. During the fourth quarter of 2023, the company witnessed consistent visitation from its guests and strong spending per visit across its portfolio. Attributes, such as consistent visitation from guests, increased spending per visit, more time spent on gaming devices and a return of core customers, have added to the positives. The company reported growth in food and beverage and hotel segments fueled by the strength in the catering business. The company intends to focus on business optimization and cost-reduction measures to drive growth.
Also, the emphasis on the expansion of new amenities bodes well. During second-quarter 2023, the company announced the opening of Polaris, a high-end casino bar located (at Green Valley Ranch Resort) and reported solid customer feedback with respect to the same. During the third-quarter 2023 earnings call, the company announced the successful opening of Stoney's North Forty bar, a new poker room and a new high-limit slot room in its Santa Fe Station property, along with Game On sports bar in its Boulder Station property.
Red Rock Resorts also stated the opening of a new high-limit table room at Green Valley Ranch property. Given the successful openings of high-limit tables and slot rooms, a new casino bar and a Red Rock Casino Resort, the company remains optimistic and intends to boost investments in this direction. This is likely to pave the path for growth in the upcoming periods.
RRR continues to focus on development projects to drive growth. During fourth-quarter 2023, the company unveiled Durango Casino & Resort and reported solid feedback concerning the same. Located off the 215 Expressway and Durango Drive in Southwest Las Vegas Valley, the new venue taps into one of the area's most rapidly expanding regions, characterized by a favorable demographic profile and limited competition within a five-mile radius.
Despite being in its early stages, the resort's debut has been well-received, resulting in an expanded market and the attraction of new customers to the company's brand. Going forward, Red Rock Resorts remains optimistic in this regard. Attributes of long-term demographic growth of the Las Vegas Valley and the proximity of the properties to high-growth areas (within the valley) are likely to add to the positives.
Image Source: Zacks Investment Research
Shares of Red Rock Resorts have gained 12.3% year to date compared with the industry’s 10% growth.
Concerns
The rise in labor and commodity costs continues to hurt the company. During the fourth quarter, RRR witnessed the impacts of inflation and increased energy costs. It also reported elevated prices concerning food and beverage and rooms. During the fourth quarter, selling, general and administrative expenses came in at $96.7 million compared with $85 million reported in the prior-year quarter. During the quarter, food and beverage expenses increased 15.3% year over year to $85.1 million. Rooms expenses were up 17.7% year over year to $52.2 million. The company is cautious of an uncertain economic environment, which may affect its results in the near term.
Zacks Rank and Stocks to Consider
Red Rock Resorts currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are:
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. RCL has a trailing four-quarter earnings surprise of 26.4%, on average. Shares of RCL have surged 120.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2024 sales and earnings per share (EPS) indicates a rise of 14.7% and 47.9%, respectively, from the year-ago levels.
Trip.com Group Limited (TCOM - Free Report) currently carries a Zacks Rank #2 (Buy). TCOM has a trailing four-quarter earnings surprise of 53.1%, on average. Shares of TCOM have gained 27.5% in the past year.
The Zacks Consensus Estimate for TCOM’s 2024 sales and EPS indicates a rise of 18.2% and 8%, respectively, from the year-ago levels.
Hyatt Hotels Corporation (H - Free Report) carries a Zacks Rank #2 at present. It has a trailing four-quarter earnings surprise of 17.8%, on average. Shares of H have rallied 44.1% in the past year.
The Zacks Consensus Estimate for H’s 2024 sales and EPS indicates a rise of 3.5% and 27%, respectively, from the year-ago levels.