Red Rock Resorts (RRR) Up 12.5% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Red Rock Resorts reported a mixed performance in its Q3 2025 earnings, with earnings exceeding estimates while revenues fell short, indicating potential challenges ahead [2][3]. Financial Performance - Adjusted earnings per share (EPS) for Q3 2025 were 68 cents, surpassing the Zacks Consensus Estimate of 36 cents, and up from 48 cents in the prior-year quarter [3]. - Quarterly revenues reached $475.6 million, slightly missing the Zacks Consensus Estimate of $476 million, but reflecting a year-over-year growth of 1.6% from $468 million [3]. - Net income for the quarter was $76.9 million, an increase from $55.4 million in the prior-year quarter [5]. - Adjusted EBITDA was reported at $190.9 million, marking a 4.5% year-over-year increase from $182.7 million, with an adjusted EBITDA margin of 40.1%, up 110 basis points from the previous year [5]. Segment Performance - Las Vegas Operations generated revenues of $468.6 million, a 0.8% increase from $464.7 million in the prior-year quarter, with adjusted EBITDA of $209.4 million, up 3.4% from $202.6 million [4]. - Native American Management reported revenues and adjusted EBITDA of $3.9 million, reflecting cumulative development fee recognition [4]. Financial Position - As of September 30, 2025, Red Rock Resorts had cash and cash equivalents of $129.8 million, down from $164.4 million as of December 31, 2024 [6]. - Outstanding debt was $3.1 billion, reduced from $3.35 billion as of December 31, 2024 [6]. - The board declared a cash dividend of $0.26 per share, payable on December 31, 2025, indicating a commitment to shareholder returns [6]. Market Sentiment - There has been a downward trend in estimates revision, with the consensus estimate shifting down by 5.19% [7]. - Red Rock Resorts currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [10]. Industry Comparison - Red Rock Resorts is part of the Zacks Gaming industry, where Boyd Gaming (BYD) has seen an 8.6% gain over the past month, reporting revenues of $1 billion for the quarter ended September 2025, a year-over-year increase of 4.5% [11]. - Boyd's EPS for the same period was $1.72, compared to $1.52 a year ago, with a current quarter earnings estimate of $1.92 per share, reflecting a year-over-year change of -2% [12].