Red Rock Resorts, Inc. (NASDAQ: RRR)

Sector: Consumer Cyclical Industry: Resorts & Casinos CIK: 0001653653
Market Cap 3.66 Bn
P/B 21.66
P/E 20.78
P/S 2.12
ROIC (Qtr) 14.26
Div Yield % 3.58
Rev 1y % (Qtr) 1.61
Total Debt (Qtr) 3.41 Bn
Debt/Equity (Qtr) 15.51
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About

Red Rock Resorts, Inc., or RRR, is a company that operates in the gaming and entertainment industry. Its main business activities include developing and managing regional entertainment destinations, with a focus on gaming operations. The company owns an indirect equity interest in Station Casinos LLC, which directly manages its gaming and entertainment facilities. RRR generates revenue primarily through its gaming operations, which include slot machines, table games, and race and sports books. Its primary products are slots, table games, and a...

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Investment thesis

Bull case

  • Healthy cash reserves of 129.76M provide 2.11x coverage of short-term debt 61.62M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 601.18M provides strong 19.91x coverage of stock compensation 30.20M, indicating sustainable incentive practices.
  • Operating cash flow of 601.18M provides solid 1.68x coverage of current liabilities 358.86M, showing strong operational health.
  • Operating cash flow of 601.18M fully covers other non-current liabilities 62.23M by 9.66x, showing strong long-term stability.
  • Operating cash flow of 601.18M provides strong 36.59x coverage of inventory 16.43M, indicating efficient inventory management.

Bear case

  • Operating cash flow of 601.18M barely covers its investment activities of (202.10M), with a coverage ratio of -2.97, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 601.18M provides thin coverage of dividend payments of (120.21M) with a -5 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 56.10M relative to inventory of 16.43M (3.41 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 444.54M show weak coverage of depreciation charges of 193.46M, with a 2.30 ratio indicating high capital intensity and potential reinvestment needs.
  • High financing cash flow of (386.82M) relative to working capital of (91.16M), which is 4.24x suggests concerning dependence on external funding for operational needs.

Product and Service Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Resorts & Casinos
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LVS Las Vegas Sands Corp 39.82 Bn 24.48 3.06 15.78 Bn
2 WYNN Wynn Resorts Ltd 20.12 Bn 2,860.00 4.09 12.20 Bn
3 MGM MGM Resorts International 9.16 Bn 44.51 0.52 31.26 Bn
4 BYD Boyd Gaming Corp 8.33 Bn -92.47 2.92 2.46 Bn
5 MTN Vail Resorts Inc 4.91 Bn 196.79 4.35 3.38 Bn
6 HGV Hilton Grand Vacations Inc. 4.44 Bn 83.82 0.89 7.28 Bn
7 CZR Caesars Entertainment, Inc. 3.93 Bn -7.83 0.34 24.88 Bn
8 RRR Red Rock Resorts, Inc. 3.66 Bn 20.78 2.12 3.41 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.67 1.18
EV to Cash from Ops. EV/CFO 13.84 39.36
EV to Debt EV to Debt 2.01 32.02
EV to EBIT EV/EBIT 17.10 44.55
EV to EBITDA EV/EBITDA 9.90 19.91
EV to Free Cash Flow [EV/FCF] EV/FCF -33.00 -82.04
EV to Market Cap EV to Market Cap 1.87 4.40
EV to Revenue EV/Rev 3.97 4.33
Price to Book Value [P/B] P/B 21.66 3.49
Price to Earnings [P/E] P/E 20.78 199.09
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.58 2.40
Dividend Payout Ratio % Div Payout % (Qtr) 61.90 38.73
Dividend per Basic Share Div per Share (Qtr) 2.00 1.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 35.49 21.58
Interest Coverage Int. cover (Qtr) 2.13 -1.90
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 41.48 7.02
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 10.44 3.69
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 6.21
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 5.01 -15.96
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 2.09 -13.29
EBIT Growth (1y) % EBIT 1y % (Qtr) 4.26 -1.32
EBT Growth (1y) % EBT 1y % (Qtr) 15.19 -10.90
EPS Growth (1y) % EPS 1y % (Qtr) 15.77 9.03
FCF Growth (1y) % FCF 1y % (Qtr) 232.58 81.04
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.76 4.33
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.49 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.11
Cash Ratio Cash Ratio (Qtr) 0.36 0.59
Current Ratio Curr Ratio (Qtr) 0.75 0.90
Debt to Equity Ratio Debt/Equity (Qtr) 15.51 4.57
Interest Cover Ratio Int Coverage (Qtr) 2.13 -1.90
Times Interest Earned Times Interest Earned (Qtr) 2.13 -1.90
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 32.00 18.45
EBIT Margin % EBIT Margin % (Qtr) 22.28 11.71
EBT Margin % EBT Margin % (Qtr) 11.83 4.06
Gross Margin % Gross Margin % (Qtr) 63.80 47.91
Net Profit Margin % Net Margin % (Qtr) 9.50 2.46