Shares of Red Rock Resorts (RRR) have rallied 93% since the start of the year: more to the left? – December 3, 2021
Red Rock Resorts, Inc. (RRR – Free Report) is poised to benefit from Las Vegas operations, digitization and development projects. This, combined with the emphasis on cost reduction efforts, bodes well.
So far this year, shares of Red Rock Resorts have jumped 92.8% from an industry decline of 7.2%. Price performance was supported by a strong history of earnings surprises. Company profits have beaten Zacks’ consensus estimate for the past four quarters. Profit estimates for 2021 and 2022 have risen 19% and 2.5%, respectively, over the past 60 days. This positive trend signifies bullish sentiment from analysts and justifies the company’s Zacks Rank # 2 (Buy), indicating strong fundamentals and the expectation of short-term outperformance. You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Las Vegas operations, a determining factor: The operations of Red Rock Resorts in Las Vegas have been a key growth driver in recent quarters and the trend is expected to continue in the coming quarters. The company is optimistic for the long term due to favorable supply-demand dynamics, positive long-term trends in population growth and a stable regulatory environment. Additionally, attributes such as best-in-class assets and locations, unprecedented distribution and scale, and a strong organic development pipeline, are likely to add to the positives.
Image source: Zacks Investment Research
Numerical efforts: The company continues to make substantial progress when it comes to cashless gaming. During the third quarter, the company launched field trials with IGT (at Red Rock and Green Valley branch properties) to bring cashless payments to the slot machine floor. Going forward, Red Rock Resorts intends to offer single access to the mobile digital wallet for gambling and paying at each of its Las Vegas properties. Apart from this, the company has entered into a partnership with GAN Limited (in October 2021) to build and deploy the next generation infrastructure stations, the online sports platform STN Sports, mobile applications and sports betting in over-the-counter and at newsstands throughout Nevada. The company said the product launch is subject to regulatory approvals.
Focus on development projects: Following a favorable decision by the California Supreme Court (in August 2020), Red Rock Resorts has focused more on the North Fork development project. The cost of completing this project, excluding financing costs, is expected to be between $ 350 million and $ 400 million. The company said the project is currently in the planning and budgeting stage.
The company focused on the Durango development project. Located off of Interstate 215 and Durango Drive in the southwestern Las Vegas Valley, the project is expected to offer 73,000 square feet of casino space, 2,000 slot machines, and 40 table games, a pound state-of-the-art sports facility, 200 hotel rooms and four full-service food and beverage outlets. Currently in the planning and budgeting stage, the company plans to start the project by the first quarter of 2022. It is bullish on this development pipeline due to the location as well as the lack of gaming competitors. unrestricted (within 5 miles of the project site). The estimated duration of construction is between 18 months and 24 months.
Cost reduction efforts: During the third quarter of 2021, the company’s performance benefited from a number of initiatives: streamlining operations, optimizing marketing initiatives and renegotiating agreements with suppliers and third parties. Supported by these initiatives, the company continues to expect more than $ 200 million in annual cost savings over its pre-pandemic cost structure. The initiatives will support efficient production and are also likely to generate margins and free cash flow.
Other key choices
Other top-ranked stocks in the consumer discretionary sector include Hilton Grand Vacations Inc. (heavyweight – Free report), Bluegreen Vacations Holding Corporation (BVH – Free report) and Camping World Holdings, Inc. (CWH – Free report).
Hilton Grand Vacations is ranked # 1 by Zacks. The company has a surprise earnings for the last four quarters of 411.1% on average. The company’s shares have risen 57.9% so far this year.
Zacks’ consensus estimate for current year sales and earnings per share (EPS) for Hilton Grand Vacations suggests growth of 222.1% and 170.8%, respectively, from levels in l ‘last year.
Bluegreen Vacations has a Zacks # 1 ranking. The company has a surprise earnings for the last four quarters of 695%, on average. The company’s shares have jumped 127.7% so far this year.
Zacks’ consensus estimate for Bluegreen Vacations’ sales and EPS for the current year shows growth of 27.5% and 199.3%, respectively, from the prior year ‘s levels.
Camping World wears a Zacks Rank # 2. The company benefits from the launch of a new peer-to-peer VR rental market and a mobile services market. He has invested heavily in product development.
Camping World has a surprise profit over the last four quarters of 70.9% on average. The company’s shares have appreciated 58.2% so far this year. Zacks’ consensus estimate for CWH’s sales and EPS for the year suggests growth of 25.9% and 77.1%, respectively, from the prior year’s levels.