Red Rock Resorts, Inc. Just Beat EPS By 36%: Here's What Analysts Think Will Happen Next

Red Rock Resorts, Inc. (NASDAQ:RRR) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. The company beat forecasts, with revenue of US$486m, some 2.2% above estimates, and statutory earnings per share (EPS) coming in at US$0.59, 36% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Red Rock Resorts

Taking into account the latest results, the most recent consensus for Red Rock Resorts from 13 analysts is for revenues of US$1.95b in 2024. If met, it would imply a modest 5.3% increase on its revenue over the past 12 months. Statutory earnings per share are expected to plummet 43% to US$1.66 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.94b and earnings per share (EPS) of US$1.82 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at US$64.79, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Red Rock Resorts analyst has a price target of US$72.00 per share, while the most pessimistic values it at US$54.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Red Rock Resorts' growth to accelerate, with the forecast 11% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.0% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 9.7% per year. Red Rock Resorts is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Red Rock Resorts. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Red Rock Resorts. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Red Rock Resorts analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Red Rock Resorts (1 can't be ignored!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com