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Why Is Red Rock Resorts, Inc. (RRR) Up 13.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for Red Rock Resorts, Inc. (RRR - Free Report) . Shares have added about 13.3% 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, Inc. 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 drivers.

Red Rock Resorts Q1 Earnings Lag Estimates, Fall Y/Y

Red Rock Resorts reported first-quarter 2020 results, wherein earnings and revenues not only missed the Zacks Consensus Estimate but also declined on a year-over-year basis. The company reported adjusted loss of 11 cents per share, which compared unfavorably with the Zacks Consensus Estimate of earnings 13 cents. Moreover, the reported figure declined from the year-ago quarter’s earnings of 16 cents.

Revenues during the quarter totaled $377.4 million, which missed the consensus mark of $438 million by 13.9%. Also, the top line declined 15.6% on a year-over-year basis. The decline can be primarily attributed to the temporary closure of all properties owing to the coronavirus outbreak.

In a bid to strengthen its liquidity position and prevent a possible recession, Red Rock Resorts suspended its quarterly dividend payouts for the remainder of 2020.

Segmental Details

Las Vegas Operations: Revenues in this segment totaled $356.5 million, down 15.6% year over year, primarily due to the temporary closure of all of the company's Las Vegas properties. Also, adjusted EBITDA declined 49.2% from the prior-year quarter’s figure to $68.5 million. The segment’s adjusted EBITDA margin contracted 1,269 basis points to 19.2%.

Native American Management: Revenues in the segment declined 16.2% to $19.3 million. Meanwhile, adjusted EBITDA declined 18% from the prior-year quarter’s figure to $17.6 million, mainly due to the temporary closure of Graton Resort.

Other Financial Details

As of Mar 31, 2020, Red Rock Resorts had cash and cash equivalent of $1.09 billion. Outstanding debt at the end of the reported quarter was $4.05 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -1596% due to these changes.

VGM Scores

At this time, Red Rock Resorts, Inc. has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Red Rock Resorts, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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