Red Rock Resorts, Inc. Just Beat EPS By 84%: Here's What Analysts Think Will Happen Next

Investors in Red Rock Resorts, Inc. (NASDAQ:RRR) had a good week, as its shares rose 6.8% to close at US$58.86 following the release of its full-year results. Revenues were US$1.7b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$2.94, an impressive 84% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Red Rock Resorts

Taking into account the latest results, the current consensus from Red Rock Resorts' twelve analysts is for revenues of US$1.95b in 2024. This would reflect a decent 13% increase on its revenue over the past 12 months. Statutory earnings per share are expected to tumble 36% to US$1.95 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.90b and earnings per share (EPS) of US$2.30 in 2024. While next year's revenue estimates increased, there was also a substantial drop in EPS expectations, suggesting the consensus has a bit of a mixed view of these results.

Curiously, the consensus price target rose 9.4% to US$60.62. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Red Rock Resorts analyst has a price target of US$66.00 per share, while the most pessimistic values it at US$48.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Red Rock Resorts' growth to accelerate, with the forecast 13% annualised growth to the end of 2024 ranking favourably alongside historical growth of 0.07% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Red Rock Resorts is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Red Rock Resorts analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Red Rock Resorts (1 makes us a bit uncomfortable!) that we have uncovered.

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

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.