Red Rock Resorts, Inc. RRR is likely to benefit from Las Vegas operations, solid Durango Casino Resort performance and a development pipeline. Also, the focus on property enhancements bodes well. However, an uncertain macroeconomic environment is a concern.
Let us discuss the factors that highlight why investors should retain the stock for now.
Factors Driving Growth of RRR Stock
Red Rock Resorts is well-positioned for continued growth, driven by strong momentum in its Las Vegas operations and the successful debut of Durango Casino & Resort. The company continues to capitalize on robust local demand, a growing population and rising entertainment spending. Management has highlighted record-high visitation and strong customer engagement across its properties, further reinforcing RRR’s dominant presence in the Las Vegas gaming market.
Durango Casino & Resort has been a key driver of growth, exceeding expectations in both gaming and non-gaming revenues. Located in an underserved area of Las Vegas, the property has effectively tapped into pent-up demand and strong customer interest, making a meaningful contribution to overall earnings. Management remains highly optimistic about Durango’s long-term potential and sees it as a model for future expansion, further strengthening RRR’s growth strategy.
Red Rock Resorts is making significant investments to enhance its existing properties, ensuring a premium guest experience that aligns with evolving consumer preferences. Recent additions, such as a Yard House at Sunset Station and China Mama at Palace Station, have been well received by guests. Meanwhile, ongoing upgrades at Sunset Station and Green Valley Ranch underscore RRR’s commitment to elevating its offerings. The $53 million renovation at Sunset Station will introduce a country-western bar, a Mexican restaurant, a redesigned casino space and a new center bar, further enhancing the property's appeal.
As Red Rock Resorts looks ahead to 2025, it remains confident in its long-term growth strategy. The success of Durango reinforces the strength of its development pipeline and extensive real estate holdings. With over 450 acres of prime developable land across the Las Vegas Valley, the company is strategically positioned to expand its footprint. This pipeline, combined with its high-quality assets and premier locations, sets the stage for significant growth, enabling RRR to potentially double its portfolio while capitalizing on favorable demographic trends and the high barriers to entry in the Las Vegas Locals market.
Concerns for RRR Stock
Zacks Investment Research
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The stock has declined 18.1% in the past six months against the industry’s 2% rise. The downside was due to an uncertain macroeconomic environment.
The company continues to witness 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 were $107.1 million compared with $96.7 million reported in the prior-year quarter.
The company is cautious about the uncertainty in the economic outlook stemming from inflation, elevated interest rates and global conflicts. Inflationary pressures can lead to higher operational costs, while increased interest rates may slow economic activity and consumer spending. Geopolitical tensions can negatively impact travel and tourism, which could limit visitor spending and hotel occupancy rates.
RRR’s 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 RCI Hospitality Holdings, Inc. RICK, Mattel, Inc. MAT and Royal Caribbean Cruises Ltd. RCL.
RCI Hospitality currently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of negative 62.9%, on average. The stock has declined 15.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCI Hospitality’s 2025 sales and EPS indicates growth of 2.5% and 1,278.8%, respectively, from year-ago levels.
Mattel currently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 37.6%, on average. The stock has gained 1.5% in the past year.
The Zacks Consensus Estimate for Mattel’s 2025 sales and EPS indicates growth of 1.4% and 4.9%, respectively, from year-ago levels.
Royal Caribbean currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 15.7%, on average. The stock has rallied 57.8% in the past year.
The Zacks Consensus Estimate for Royal Caribbean’s 2025 sales and EPS indicates growth of 9% and 26.4%, respectively, from year-ago levels.
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