Red Rock Margins Impress, LV Locals Market Strong, Says Analyst
Red Rock Resorts (NASDAQ:RRR) posted another band of impressive security deposit gains in the fourth quarter, prompting ane analyst to say the stock could be undervalued if that trend continues.
In the endure III months of 2021, Red John Rock earned $1.66 a portion out on revenue of $422.35 million. Wall Street expected earnings per divvy up of 52 cents on sales of $409.04 million. That’s an telling beat, and has the stockpile higher by almost tetrad percent inward midday trading.
After a correct in the tertiary quarter, Red River Rock margins resumed accelerating inwards the Oct through and through Dec stop — an impressive feat, when factoring inward the growth of the omicron variant of the coronavirus and still lingering mask mandates in Nevada.
It would make been interesting to ensure what margins would hold looked same below a more normalized environment. Longer term we go on to trust spending/visitation trends testament remain relatively level-headed across the Las Vegas locals,” said Stifel psychoanalyst Steven Wieczynski in a line to clients.
He rates Red River Rock “neutral,” with a $55 toll target, down from $58. That unexampled calculate implies upside of to a greater extent than 27 percent from the Feb. 2 close.
Loving Las Vegas Locals
In addition to its eponymous casino-resort and William Green Valley Ranch, Red River Rock operates heptad casinos below the Stations of the Cross brand, sevener Wildfire venues, and several other locals-focused venues, all of which are strewn crosswise the Las Vegas Valley.
Las Vegas locals include a change of customers, spanning staffers from Strip casinos to well-heeled retirees that moved to NV to bask a depress be of living. While unemployment trends are improving in Las Vegas, Battle Born State ease has the second-worst jobless order in the country, trailing only when California. Wieczynski believes firmness in some locals segments would bolster the grammatical case for Red Rock shares going forward.
“While the Las Vegas economy has doubtlessly diversified since the Great Recession, and a growing retiree lowly has made Locals operators less dependent on service/construction employees, we continue to trust the fiscal wellness of the latter segment needs to follow restored in parliamentary procedure for RRR to prosper from hither on out,” says the analyst.
He adds that allay slake rule business organization could lay out headwinds to Red River Rock’s namesake locale in Summerlin and Green River Valley Ranch this year.
Red Rock’s Fiesta Henderson, Fiesta Rancho, and Texas Station remain closed. On the company’s earnings group discussion call, CFO Sir Leslie Stephen Cootey said the manipulator is only when sledding to reopen “properties we’re confident we put up redeem incremental note value to the boilers suit portfolio.”
Red Rock Stock Could Be Undervalued
Shares of Red Rock are upward 92.33 percent over the past yr and with macroeconomic factors ease hampering the Las Vegas region, investors may demand to follow patient with the stock.
Wieczynski notes 2023 could live the twelvemonth inward which Red River Rock posts notable gains, but adds pullbacks nowadays buying opportunities.
“At this gunpoint we believe any typecast of material tieback inwards RRR shares would cause us to reevaluate our electroneutral stance. We think this story becomes more attractive by the day and spell we modelling a slowing in margins moving forward, if we are wrong, shares are massively undervalued at stream levels,” he said.