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Red Rock Resorts (RRR)
NASDAQ:RRR
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Red Rock Resorts
(NASDAQ:RRR)
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Rating:70Outperform
Price Target:
$73.00
▲(20.56% Upside)
Action:ReiteratedDate:02/21/26
The score is driven primarily by solid profitability and cash generation, tempered by balance-sheet leverage risk and higher near-term capital intensity. Technicals are supportive (uptrend with positive momentum), while valuation is mixed with a reasonable P/E balanced by a strong dividend yield.
Positive Factors
High margins & profitability
Sustained high adjusted EBITDA margins reflect strong operating leverage and disciplined cost control across gaming and non‑gaming segments; durable margin structure supports cash generation, resilience to demand swings, and capacity to fund reinvestment and returns over the next several quarters.
Consistent cash generation
Consistently positive operating cash flow and improving free cash flow conversion enable repeatable deleveraging, dividends, and buybacks. Reliable cash generation underpins financial flexibility to fund projects and shareholder returns while cushioning cyclical gaming volatility.
Growth pipeline & financed projects
A funded development pipeline (Durango expansion and a fully financed North Fork project) signals disciplined capital allocation toward assets likely to expand capacity and market share in Las Vegas locals. Project financing reduces execution risk and supports long‑term EBITDA growth.
Negative Factors
Elevated leverage history
Although deleveraging has accelerated, a multi‑year record of thin equity and very high leverage increases refinancing, covenant and liquidity risk. Higher absolute debt burdens limit strategic flexibility and amplify downside in weaker demand periods until leverage is meaningfully lower.
High near‑term capital intensity
Large planned 2026 investment spend raises funding needs and compresses free cash flow in the medium term; sustaining growth through heavy capex will require continued cash conversion and disciplined balance‑sheet management to avoid stalling deleveraging or reducing returns.
Construction disruption & forecasting uncertainty
Ongoing renovations and large expansions create multi‑quarter revenue and margin volatility from offline rooms and phased closures. Unquantified future disruption complicates forward visibility and could temporarily depress yields and FCF while projects complete.
Red Rock Resorts (RRR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.36B
Dividend Yield3.22%
Average Volume (3M)644.84K
Price to Earnings (P/E)19.4
Beta (1Y)0.89
Revenue Growth4.69%
EPS Growth15.18%
CountryUS
Employees9,300
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.44
Shares Outstanding59,141,030
10 Day Avg. Volume637,651
30 Day Avg. Volume644,837
Financial Highlights & Ratios
PEG Ratio0.87
Price to Book (P/B)17.53
Price to Sales (P/S)1.82
P/FCF Ratio12.65
Enterprise Value/Market Cap0.55
Enterprise Value/Revenue1.73
Enterprise Value/Gross Profit2.90
Enterprise Value/Ebitda4.35
Forecast
1Y Price Target
$72.17Price Target Upside19.19% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
EPS Forecast (FY)2.88
Revenue Forecast (FY)$2.06B
Red Rock Resorts Business Overview & Revenue Model
Company DescriptionRed Rock Resorts, Inc., through its interest in Station Holdco and Station LLC, develops and operates casino and entertainment properties in the United States. It operates through two segments, Las Vegas Operations and Native American Management. The company owns and operates 9 gaming and entertainment facilities, and 10 smaller casinos in the Las Vegas regional market. In addition, it manages Graton Resort & Casino in northern California. As of December 31, 2021, it operated approximately 13,894 slot machines, 240 table games, and 3,081 hotel rooms in the Las Vegas market. The company was formerly known as Station Casinos Corp. and changed its name to Red Rock Resorts, Inc. in January 2016. Red Rock Resorts, Inc. was incorporated in 1976 and is based in Las Vegas, Nevada.
How the Company Makes MoneyRed Rock Resorts generates revenue through a diverse range of streams primarily from its gaming operations, which include slot machines, table games, and sports betting. Additionally, the company earns income from its hotel accommodations, food and beverage services, and entertainment venues within its properties. The company attracts a steady flow of customers through loyalty programs and targeted marketing strategies aimed at both local residents and visitors. Moreover, strategic partnerships with various vendors enhance the overall customer experience and contribute to revenue growth, while a focus on operational efficiency helps optimize profit margins.
Red Rock Resorts Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
Overall the call emphasized strong, record-setting financial and operational performance (multiple record quarters and all-time highs in adjusted EBITDA), robust free cash flow conversion and shareholder returns, active strategic reinvestment across the portfolio, and a healthy development pipeline (Durango expansion, North Fork on track). The primary negatives were near-term construction disruption and associated uncertainty, modest single-digit growth rates, elevated absolute leverage and significant planned 2026 capex, and some external legal and tax-rule ambiguity. Management expressed confidence in long-term growth prospects and the ability to manage short-term disruption.Q4-2025 Updates
Positive Updates
Record Financial Performance — Las Vegas Operations
Las Vegas operations set new fourth-quarter records for net revenue and adjusted EBITDA (Q4 net revenue $505M, +2.5% YoY; Q4 adjusted EBITDA $231M, +3.2% YoY) and delivered the strongest full-year performance on record (FY net revenue just under $2.0B, +2.9% YoY; FY adjusted EBITDA $915.9M, +4.2% YoY). This marked the ninth consecutive record quarter for both net revenue and adjusted EBITDA and the fifth consecutive year of record adjusted EBITDA.
Consolidated Results and Margin Expansion
Consolidated Q4 net revenue $511.8M (+3.2% YoY) and consolidated Q4 adjusted EBITDA $213.0M (+5.4% YoY). Q4 adjusted EBITDA margin expanded to 41.7% (+84 bps YoY). Full-year consolidated net revenue ~$2.0B (+3.7% YoY) and full-year consolidated adjusted EBITDA $848.6M (+6.6% YoY) with FY consolidated adjusted EBITDA margin 42.2% (+114 bps YoY).
Strong Profitability Metrics — High Margins
Las Vegas full-year adjusted EBITDA margin was 46.2% (+56 bps YoY) and Q4 Las Vegas adjusted EBITDA margin was 45.8% (+32 bps YoY), demonstrating continued high-margin operations and operating discipline.
Robust Free Cash Flow and Capital Returns
Q4 operating free cash flow conversion was 62% of adjusted EBITDA, generating $131.5M ($1.25 per share). Full-year operating cash flow conversion was 55% of adjusted EBITDA, producing $466.3M ($4.44 per share). Returned ~$296.9M to shareholders in 2025 via dividends and share repurchases; repurchased ~880,000 shares at an average price of $54.67; Board declared a $1.00 special dividend and a $0.26 regular dividend.
Deleveraging and Balance Sheet Progress
Cash and cash equivalents of $142.5M and total principal debt of $3.4B resulted in net debt of ~$3.3B. Net debt to EBITDA was 3.87x at quarter-end, marking the seventh consecutive quarter of deleveraging.
Active and Strategic Capital Deployment
Invested $78.9M in Q4 (approximately $64.2M investment capital and $14.7M maintenance) and $319M for full-year 2025 (approx. $227M investment, $92M maintenance). 2026 capex guidance of $375–$425M (investment $275–$300M; maintenance $100–$125M) to support Durango, Sunset Station, and Green Valley Ranch projects.
Durango Expansion and Pipeline Growth
Completed a Durango expansion Dec 15 (25,000+ sq ft new casino space and ~2,000 parking spaces). Broke ground Jan 5 on next phase: expand podium by ~275,000 sq ft, add ~400 slot machines and 'Android gaming', 36-lane bowling, luxury movie theaters, new restaurants and entertainment (Moonshine Flats). Project cost estimated at ~$385M; ~18 months construction expected.
North Fork Project On Track and Financed
North Fork construction progressing well and remains on track for an early Q4 2026 opening. Total all-in project cost ~ $750M and is fully financed; Red Rock's outstanding note balance due to tribe ~$77.9M. Company does not expect a recent California court ruling on a separate tribal matter to impede opening.
Operational Strength Across Segments
Gaming posted the highest fourth-quarter revenue and profitability in company history; non-gaming segments (hotel and F&B) achieved near-record or record revenue and profitability. Carded slot play, regional and national customers, and higher-limit product drove performance, and group & catering showed near‑record results (adjusted for rooms offline).
Employer Recognition
Station Casinos recognized by Forbes as one of America's Best Large Employers for 2026, highlighting strengths in workplace culture and team engagement.
Negative Updates
Construction-Related Disruption and Uncertainty
Ongoing renovation and expansion projects will cause near-term operating disruption. Q4 disruption amounted to ~$5.1M (mainly at Green Valley Ranch) versus larger anticipated disruption in some quarters. Management expects roughly $9M of disruption tied to Green Valley Ranch during peak construction and cannot yet quantify full disruption from Durango and Sunset Station phases.
Hotel Revenue Impact from Renovations
Hotel performance was hurt by offline room nights at Green Valley Ranch (West/East Tower renovations), reducing room nights and affecting segment comparables despite near‑record hotel results on an adjusted basis.
Modest Top-Line Growth Rates
Revenue and EBITDA growth remain in low single digits: Las Vegas net revenue growth of +2.9% (FY) and adjusted EBITDA +4.2% (FY). While record-setting, these represent modest percentage growth versus the prior year rather than high double-digit acceleration.
Elevated Debt Level and Capital Intensity
Total principal debt of $3.4B and net debt ~$3.3B with net leverage at 3.87x; 2026 capex guidance of $375–$425M increases near-term capital intensity and will require ongoing balance sheet management despite continued deleveraging trend.
Regulatory/Legal Noise Around North Fork Tribe
An unfavorable California court ruling on a single tribal matter was noted; while management does not believe it will impede gaming on tribal land or the North Fork opening, the ruling introduces some legal and public-market uncertainty.
Tax Code Complexity Impacting High-End Customers
Confusion around the '90% deduction' item in recent tax legislation is creating administrative ambiguity and customer education needs. Management is working with industry/IRS to clarify rules; unresolved clarity could pose near-term headwinds for high-end player behavior until resolved.
Near-Term Operational Cadence Unknown
Management declined to quantify full-year disruption impacts for Durango and Sunset Station renovations and noted some items are based on 'gut feel' pending more operational data, adding forecasting uncertainty for 2026 cadence.
Company Guidance
The company guided to $375–425 million of total capital spend for 2026 (including $275–300 million of investment capital and $100–125 million of maintenance capital), and reiterated major project costs and timings: Durango expansion ~ $385 million (adds ~275k sq ft and ~400 slots), Sunset Station next phase ~$87 million, Green Valley Ranch next phase ~$56 million, and North Fork total all‑in project cost ~ $750 million (fully financed) with an opening targeted for early Q4 2026 and Red Rock’s outstanding note balance to the tribe of ~$77.9 million; balance sheet and liquidity at Q4 included $142.5 million cash, $3.4 billion total debt, $3.3 billion net debt and a net‑debt/EBITDA ratio of 3.87x (seventh consecutive quarter of deleveraging). Operationally they reported Q4 Las Vegas net revenue of $505.0 million (+2.5% YoY), Las Vegas adjusted EBITDA $231.0 million (+3.2%) with a 45.8% margin (+32 bps), consolidated Q4 net revenue $511.8 million (incl. $3.7M North Fork) and consolidated adjusted EBITDA $213.0 million (41.7% margin, +84 bps); full‑year Las Vegas net revenue was just under $2.0 billion (+2.9%) with adjusted EBITDA $915.9 million (+4.2%, 46.2% margin, +56 bps), and consolidated FY net revenue ~$2.0 billion (incl. $17.6M North Fork) with consolidated adjusted EBITDA $848.6 million (+6.6%, 42.2% margin, +114 bps). They converted 62% of adjusted EBITDA to operating free cash flow in the quarter ($131.5 million, or $1.25/share) and 55% on a 2025 cumulative basis ($466.3 million, or $4.44/share), returned ~ $296.9 million to shareholders in 2025 (dividends + buybacks), repurchased ~880,000 shares at an average $54.67 reducing shares outstanding to ~104.9 million, and declared a $1.00 special dividend (payable Feb 27, record Feb 20) and a regular $0.26 dividend (payable Mar 31, record Mar 16); Q4 capex was $78.9 million (investment $64.2M, maintenance $14.7M) and full‑year capex was $319 million (investment $227M, maintenance $92M), down from prior guidance due to timing, and management said they still expect to grow Las Vegas EBITDA in 2026 despite near‑term construction disruption (Q4 disruption was ~$5.1M; Green Valley disruption was highlighted at roughly $9M).Red Rock Resorts Financial Statement Overview
Summary
Strong operating profitability and cash generation (consistently positive operating cash flow; improved free cash flow in 2024–2025) support the fundamentals, but the balance sheet remains the key constraint given the multi-year history of very high leverage despite a sharp reported improvement in 2025.Income Statement
Revenue growth has been strong overall, with 2025 accelerating sharply (about +81% vs. 2024) after steady gains in 2021–2024. Profitability is solid for the group: 2025 gross margin ~53% and operating profit margin ~30%, with a positive net margin ~9%. The main weakness is variability versus prior years—net margins were higher in 2021–2023 and there was a loss in 2020—showing sensitivity to operating conditions and cost/mix shifts.78
Positive
Balance Sheet
Leverage looks volatile across the period. Debt-to-equity was extremely high in 2021–2024 (roughly 16x–69x), reflecting a thin equity base and higher balance-sheet risk; 2025 shows a sharp improvement (debt-to-equity ~0.28x) driven by much lower reported debt and higher equity. While that 2025 step-down materially strengthens the profile, the multi-year history of heavy leverage and equity thinness raises risk around durability of the improvement.52
Neutral
Cash Flow
Cash generation is generally healthy: operating cash flow is consistently positive and strong (roughly $494M–$610M in 2021–2025), supporting earnings quality. Free cash flow is more uneven—negative in 2022–2023, then positive in 2024 and surging in 2025—indicating swings in spending and/or working-capital needs. Overall, the business demonstrates good cash-producing ability, but free-cash-flow stability is not consistent year to year.74
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.01B | 1.94B | 1.72B | 1.66B | 1.62B |
| Gross Profit | 1.06B | 1.19B | 1.10B | 1.08B | 1.07B |
| EBITDA | 801.60M | 744.12M | 694.32M | 693.14M | 546.54M |
| Net Income | 188.07M | 154.05M | 176.00M | 205.46M | 241.85M |
Balance Sheet | |||||
| Total Assets | 4.17B | 4.05B | 3.95B | 3.35B | 3.14B |
| Cash, Cash Equivalents and Short-Term Investments | 142.47M | 164.38M | 137.59M | 117.29M | 275.28M |
| Total Debt | 58.18M | 3.44B | 3.33B | 3.02B | 2.88B |
| Total Liabilities | 3.83B | 3.74B | 3.71B | 3.31B | 3.09B |
| Stockholders Equity | 208.33M | 215.07M | 168.84M | 43.78M | 59.49M |
Cash Flow | |||||
| Free Cash Flow | 288.87M | 249.42M | -207.29M | -19.12M | 544.02M |
| Operating Cash Flow | 609.51M | 548.26M | 494.34M | 542.22M | 609.96M |
| Investing Cash Flow | -251.36M | -321.79M | -653.85M | -442.14M | 586.26M |
| Financing Cash Flow | -380.07M | -199.67M | 179.81M | -290.05M | -1.01B |
Red Rock Resorts Technical Analysis
Neutral
60.55
Price Trends
61.92
Negative
59.11
Positive
56.72
Positive
Market Momentum
0.06
Positive
45.18
Neutral
31.48
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RRR, the sentiment is Neutral. The current price of 60.55 is below the 20-day moving average (MA) of 62.75, below the 50-day MA of 61.92, and above the 200-day MA of 56.72, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 45.18 is Neutral, neither overbought nor oversold. The STOCH value of 31.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RRR.
Red Rock Resorts Risk Analysis
Red Rock Resorts disclosed 38 risk factors in its most recent earnings report. Red Rock Resorts reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Red Rock Resorts Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.28B | 3.69 | 87.98% | 0.84% | 5.91% | 336.91% | |
70 Outperform | $6.36B | 19.38 | 88.84% | 3.22% | 4.69% | 15.18% | |
62 Neutral | $9.43B | 48.80 | 7.74% | ― | 0.05% | -94.07% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $6.41B | 17.38 | 36.28% | 0.38% | 7.97% | -0.14% | |
58 Neutral | $2.25B | -7.03 | -13.89% | 5.35% | 4.18% | -13.89% | |
50 Neutral | $2.08B | -2.60 | -35.97% | ― | 8.24% | -77.54% |
* Consumer Cyclical Sector Average
RRR
Red Rock Resorts
60.55
14.14
30.46%
BYD
Boyd Gaming
83.23
9.59
13.02%
CHDN
Churchill Downs
91.93
-22.78
-19.86%
VAC
Marriott Vacations Worldwide Corporation
65.01
-5.02
-7.16%
MGM
MGM Resorts
36.86
3.67
11.06%
PENN
PENN Entertainment
15.64
-5.12
-24.66%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.