Red Rock Resorts’ first quarter results were met with a positive market reaction, as the company delivered growth across its gaming and non-gaming segments while maintaining stable operating margins. Management pointed to the ongoing momentum at the Durango Casino & Resort, which continues to attract new customers and bolster the Station Casinos brand. CFO Stephen Cootey emphasized that “the property remains on a solid ramp trajectory” and highlighted increased visitation and engagement from carded customers as key drivers. The company also noted that its operational discipline and expense management, including flat cost of goods sold and a notable reduction in utility costs, contributed to strong profitability for the quarter.
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Red Rock Resorts (RRR) Q1 CY2025 Highlights:
- Revenue: $497.9 million vs analyst estimates of $495.1 million (1.8% year-on-year growth, 0.6% beat)
- Adjusted EPS: $0.51 vs analyst estimates of $0.45 (12.9% beat)
- Adjusted EBITDA: $215.1 million vs analyst estimates of $210 million (43.2% margin, 2.4% beat)
- Operating Margin: 31.1%, in line with the same quarter last year
- Market Capitalization: $3.06 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Red Rock Resorts’s Q1 Earnings Call
- Carlo Santarelli (Deutsche Bank): Asked about margin flow-through on modest revenue growth and the impact of sports betting events; COO Scott Kreeger cited improved sportsbook performance and expense controls as key contributors.
- John DeCree (CBRE): Inquired about the rationale for the special dividend and capital allocation following the North Fork financing; CFO Stephen Cootey explained the timing was based on capital returns and the company’s balanced approach to growth and shareholder rewards.
- Shaun Kelley (Bank of America): Questioned the impact of construction costs and tariffs on project budgets; CEO Lorenzo Fertitta and Cootey described sourcing alternatives and contract structures intended to minimize material impacts.
- Barry Jonas (Truist Securities): Asked about managing operating margins in the face of rising tariffs; Kreeger said cost increases would primarily be addressed through sourcing and vendor negotiations, with passing costs to customers as a last resort.
- Steve Wieczynski (Stifel): Sought detail on trends in non-gaming spend and potential construction disruptions; Kreeger noted healthy discretionary spending, while Cootey described the expected timing and management of disruptions at key properties.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will closely monitor (1) the pace of customer acquisition and revenue ramp at Durango, (2) execution of major property renovations at Sunset Station and Green Valley Ranch amid construction-related disruptions, and (3) management’s success in mitigating tariff and supply chain risks on capital projects. The impact of Las Vegas demographic trends and the rollout of new amenities will also be key signposts for future performance.
Red Rock Resorts currently trades at $51.55, up from $42.13 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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