Red Rock Resorts, Inc. (RRR) Down 30.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Red Rock Resorts, Inc. (RRR). Shares have lost about 30.2% in that time frame, underperforming the S&P 500.

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

Red Rock Q4 Earnings Beat Estimates, Revenues Miss

Red Rock Resorts reported mixed fourth-quarter 2019 financial numbers, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company reported adjusted earnings of 18 cents per share, which beat the Zacks Consensus Estimate of 11 cents. However, the reported figure declined from the year-ago quarter’s earnings of 30 cents by 40%.

Revenues during the quarter totaled $460.8 million, which missed the consensus mark of $463 million. However, the top line improved 6.8% year over year. The uptick can primarily be attributed to a year-over-year rise in Las Vegas operations.

Casino revenues in the quarter amounted to $255.8 million, up 6.2% year over year. Food and beverage revenues increased 9.8% year over year to $110.8 million. Other revenues declined 3.4% on a year-over-year basis to $26.1 million. Room revenues increased 10.9% year over year to $46.8 million. Management fees revenues rose 3.9% to $21.3 million.

Segmental Details

Las Vegas Operations: Revenues in this segment totaled $437.9 million, up 6.9% year over year. This uptick can be attributed to higher revenues from the Palms Casino Resort. However, Adjusted EBITDA increased to $125.5 million by 3.7% on a year-over-year basis. The segment’s adjusted EBITDA margin contracted 89 basis points to 28.6%.

Native American Management: Revenues in the segment increased 3.9% to $21.2 million. Meanwhile, adjusted EBITDA increased to $19.9 million from $19.1 million owing to rise in management fees generated under the Graton Resort management agreement.

Other Financial Details

As of Dec 31, 2019, Red Rock had cash and cash equivalent of $128.8 million. Outstanding debt at the end of the reported quarter was $3.076 billion. The company declared a quarterly cash dividend of 10 cents payable on Mar 27, 2020 to shareholders of record as of Mar 13, 2020.

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months. The consensus estimate has shifted 65.28% due to these changes.

VGM Scores

Currently, Red Rock Resorts, Inc. has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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

Red Rock Resorts, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.