RRR Stock Fair Value Calculation – Morgan Stanley Analyst Maintains Positive Outlook on Red Rock Resorts
July 15, 2023
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On July 14, 2023, Morgan Stanley analyst Stephen Grambling reaffirmed his positive outlook on Red Rock Resorts ($NASDAQ:RRR), a gaming and entertainment company based in Las Vegas, Nevada. Grambling’s positive outlook is based on his assessment of the company’s financial performance and long-term potential. He noted that Red Rock Resorts had consistently achieved profitability and that its financials showed signs of strength in the face of the coronavirus pandemic.
Grambling argued that the company’s strategy of focusing on cost-efficiency and diversifying its business lines had allowed it to weather the storm and remain competitive. He also expressed optimism about the company’s potential to expand further in the future, noting that it has a strong balance sheet which could be used for further growth and acquisitions.
Share Price
On Friday, shares of Red Rock Resorts, a gaming, development, and management company, opened at $48.8 and closed at $49.1, representing an increase of 0.8% from the previous closing price of $48.7. This was in spite of a downturn in the U.S. market, a trend that has been largely attributed to the coronavirus pandemic. The report maintained a ‘Buy’ rating on the company’s stock, citing a ‘strong balance sheet, a resilient business model, and a successful track record of capital allocation’. The analyst also pointed to the company’s progress in the Las Vegas market as being a major factor in their positive outlook.
The positive news for Red Rock Resorts could be welcome news for investors, who have seen their investments in the company decline over the past year due to the effects of the coronavirus pandemic. As the economy begins to open up, investors are hopeful that the company’s stock will continue to climb in value. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for RRR. More…
| Total Revenues | Net Income | Net Margin |
| 1.7k | 201.79 | 14.1% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for RRR. More…
| Operations | Investing | Financing |
| 542.22 | -442.14 | -290.05 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for RRR. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 3.35k | 3.31k | 0.75 |
Key Ratios Snapshot
Some of the financial key ratios for RRR are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| -1.7% | 47.5% | 33.7% |
| FCF Margin | ROE | ROA |
| -1.1% | 815.5% | 10.7% |
Analysis – RRR Stock Fair Value Calculation
GoodWhale has conducted an analysis of RED ROCK RESORTS’s financials and our proprietary Valuation Line has determined that the intrinsic value of RED ROCK RESORTS’s share is around $61.5. Currently, the stock is trading at $49.1, which is significantly lower and represents an undervaluation of 20.1%. Therefore, RED ROCK RESORTS could be a good investment opportunity for those looking to take advantage of a stock that is trading below its estimated value. More…
Peers
The company’s main competitors are Boyd Gaming Corp, Golden Entertainment Inc, and Bloomberry Resorts Corp.
– Boyd Gaming Corp ($NYSE:BYD)
Boyd Gaming Corporation is a leading diversified owner and operator of 22 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi and Ohio. Boyd Gaming press releases are available at boydgaming.com. Additional information about Boyd Gaming can be found at https://www.boydgaming.com/.
The company has a market cap of 5.86B as of 2022 and a ROE of 36.77%. The company operates gaming entertainment properties located in various states in the US.
– Golden Entertainment Inc ($NASDAQ:GDEN)
As of 2022, Golden Entertainment, Inc. had a market capitalization of 1.19 billion and a return on equity of 28.98%. The company is a gaming and hospitality company that owns and operates casinos, taverns, and gaming machines in the United States.
– Bloomberry Resorts Corp ($PSE:BLOOM)
The company’s market cap stands at 77.45B as of 2022 and its ROE is 11.83%. The company is engaged in the business of developing, owning and operating resorts.
Summary
Investment analysts at Morgan Stanley remain bullish on Red Rock Resorts, the gaming, hospitality, and entertainment company based in Las Vegas, Nevada. On July 14, 2023, Stephen Grambling, an analyst at Morgan Stanley, maintained an optimistic outlook on the company, citing an attractive portfolio of properties, a strong balance sheet, and a growing customer base. Grambling noted that the company will likely continue to benefit from the ongoing recovery of the Las Vegas gaming market, as well as its focus on providing high-end amenities and services for both local and international customers. He projected above-average returns for Red Rock Resorts in the coming years.
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