RRR: Las Vegas Locals Strength And Pipeline Execution Will Shape Future Upside Risk

Analysts have nudged their fair value estimate for Red Rock Resorts slightly higher to approximately $65.20 per share from about $65.07, citing a robust Las Vegas locals backdrop, a growing pipeline of development and expansion projects, and expectations for solid EBITDA growth despite ongoing construction disruption.

Analyst Commentary

Recent Street research continues to highlight a constructive backdrop for Red Rock Resorts, with most commentary focused on the durability of Las Vegas locals demand, the scale of the development pipeline, and how ongoing construction disruption is being reflected in forward estimates and valuation.

Bullish Takeaways

Bullish analysts point to a visible project pipeline, including the Durango expansion and active renovations at key properties, as a driver of several hundred million dollars of potential incremental EBITDA, with a meaningful portion expected within the next three years.
Multiple positive rating and target price changes emphasize that the Las Vegas locals market remains resilient, with recent results suggesting that concerns about spillover weakness from the Strip are overstated.
Some valuation frameworks highlight a compelling risk and reward profile after recent share pullbacks, arguing that 2026 consensus already embeds a reasonable level of construction related headwinds from Durango.
Solid performance in casino and food and beverage revenue, even amid notable construction disruption, is viewed as evidence that Red Rock’s local market positioning and product offering can support sustained growth during the build out phase.

Bearish Takeaways

Bearish analysts view the shares as largely fully valued at current levels, suggesting that near term upside could be constrained unless execution on the development pipeline exceeds expectations.
Some commentary stresses that while fundamentals are strong, they would not chase the stock here and prefer to wait for an “irrational” pullback to improve the entry point relative to their fair value estimates.
There is caution that, despite the constructive outlook, ongoing construction disruption still introduces execution risk, and any delays or cost overruns at key projects could weigh on earnings momentum.

What's in the News

Jefferies upgraded Red Rock Resorts to Buy from Hold with a $65 price target, citing a clear upside path from the Durango expansion, active renovations, and several hundred million dollars of potential incremental EBITDA, including about $200 million expected within three years (Jefferies research note).
Stifel raised its price target on Red Rock Resorts to $63 from $60 while maintaining a Hold rating, arguing that fears of Las Vegas Strip weakness spilling into the locals market appear overblown but preferring to wait for a more attractive entry point (Stifel research note).
Red Rock Resorts increased its equity buyback authorization by $300 million to a total of $900 million and extended the program through December 31, 2027, reinforcing management's capital return commitment (company buyback update).
From July 1, 2025 to September 30, 2025, the company repurchased 92,237 shares for $5.58 million, completing 8,074,820 shares, or 12.58 percent of its stock, for $324.76 million under the long running buyback program announced in 2019 (company buyback tranche update).
Red Rock Resorts declared a fourth quarter 2025 cash dividend of $0.26 per Class A common share, payable December 31, 2025 to shareholders of record as of December 15, 2025 (company dividend announcement).

Valuation Changes

The fair value estimate has risen slightly to approximately $65.20 per share from about $65.07, reflecting a modestly more constructive long-term outlook.
The discount rate has fallen slightly to roughly 9.78 percent from about 9.86 percent, indicating a marginal reduction in perceived risk or cost of capital.
The revenue growth assumption has risen slightly to about 3.46 percent from roughly 3.43 percent, implying modestly stronger top-line expectations.
The net profit margin assumption has edged down slightly to around 11.93 percent from about 12.13 percent, suggesting a small anticipated compression in profitability.
The future P/E multiple has increased slightly to roughly 19.0 times from about 18.7 times, indicating a modestly higher valuation multiple applied to forward earnings.

Expansion into fast-growing neighborhoods and upgraded properties is attracting younger, higher-value guests, boosting market share and margins.
Local population growth, tax benefits, and a robust land pipeline position the company for sustained revenue growth and financial flexibility.
Strategic focus on Las Vegas, high capital spending, demographic changes, digital competition, and environmental risks all threaten Red Rock Resorts' long-term revenue growth and profitability.

Catalysts

About Red Rock Resorts

Through its interest in Station Casinos LLC, develops and manages casino and entertainment properties in the United States.What are the underlying business or industry changes driving this perspective?

Strong migration and household growth in the Las Vegas Valley, particularly in areas like Summerlin and Henderson, is driving a sustained expansion of the local customer base, which directly supports ongoing increases in visitation, gaming volume, and spend per visit-positively impacting long-term revenue and EBITDA growth.
The successful rollout and ramp-up of new properties like Durango, combined with major upgrades to existing properties in rapidly growing neighborhoods, are enabling Red Rock Resorts to attract younger demographics and higher-value guests, expanding market share and supporting both revenue and margin expansion.
Upgraded amenities, high-limit gaming areas, and refreshed food and beverage concepts are broadening appeal and increasing spend, particularly among under-35 customers and VIP segments, which strengthens top-line growth and improves net margins.
Favorable recent and upcoming tax legislation is set to boost local discretionary income for Red Rock's customer base, while accelerated depreciation and other tax relief measures will increase free cash flow, providing flexibility for capital returns and reducing leverage, which supports higher EPS and balance sheet strength.
The company's large land bank and disciplined approach to new development projects in high-barrier-to-entry locations uniquely position Red Rock Resorts to capitalize on the growing preference for local, integrated resort experiences, providing a multi-year pipeline for revenue and EBITDA expansion.

Red Rock Resorts Earnings and Revenue Growth

Red Rock Resorts Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Red Rock Resorts's revenue will grow by 2.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 8.9% today to 11.5% in 3 years time.
Analysts expect earnings to reach $249.6 million (and earnings per share of $2.31) by about September 2028, up from $176.7 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $210.5 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.5x on those 2028 earnings, up from 20.3x today. This future PE is greater than the current PE for the US Hospitality industry at 23.9x.
Analysts expect the number of shares outstanding to decline by 0.65% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.98%, as per the Simply Wall St company report.

Red Rock Resorts Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Red Rock Resorts' heavy reliance and concentration in the Las Vegas locals market exposes it to heightened risk from any local economic downturns, which could lead to unpredictable swings in revenue and earnings.
The company's ongoing and upcoming large-scale capital expenditures on multiple property expansions and renovations (Durango, Green Valley Ranch, Sunset Station, and North Fork) present sustained capex requirements that may suppress free cash flow and pressure net margins, especially if returns do not materialize as projected or if there are delays or cost overruns.
Demographic shifts, including the potential reduced interest in traditional casino gaming among younger generations-despite recent database growth-may limit long-term visitation growth and per-customer revenue, impacting top-line performance over time.
Accelerating digital transformation in gambling, such as the rise of online casinos and sports betting, could erode the market share of Red Rock's brick-and-mortar casinos, slowing same-store sales growth and diminishing future revenue streams.
Climate and regulatory pressures related to water and energy usage, heightened by Las Vegas's geographic and environmental context, could increase operating costs and capex requirements, compressing operating margins and posing a long-term threat to profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $63.462 for Red Rock Resorts based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $68.0, and the most bearish reporting a price target of just $53.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.2 billion, earnings will come to $249.6 million, and it would be trading on a PE ratio of 33.5x, assuming you use a discount rate of 10.0%.
Given the current share price of $60.98, the analyst price target of $63.46 is 3.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Red Rock Resorts?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

RRR: Ongoing Renovations And Expansion Are Expected To Drive Stronger Upside Momentum