Red Rock Resorts Rallies on Q4 Earnings Beat, Special Dividend

Posted on: February 7, 2024, 05:50h. 

Last updated on: February 8, 2024, 11:20h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Red Rock Resorts (NASDAQ: RRR) rallied in Wednesday’s after-hours trading session. That’s after the gaming company posted estimate-beating fourth-quarter results while announcing a special dividend.

The operator of the Station casinos, among others, earned 95 cents a share on revenue of $462.7 million in the final three months of 2023. Analysts expected earnings of 51 cents on sales of $439.6 million. On a year-over-year basis, Red Rock’s top line grew 8.8%, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 3.6%.

Net revenues from Las Vegas operations were $459.4 million for the fourth quarter of 2023, an increase of 9.5%, or $39.7 million, from $419.6 million in the same period of 2022,” according to a statement issued by the company. “Adjusted EBITDA from Las Vegas operations was $220.3 million for the fourth quarter of 2023, an increase of 6.5%, or $13.4 million, from $206.9 million in the same period of 2022.”

In addition to its namesake venue in Summerlin and the Green Valley Ranch in Henderson, Red Rock operates multiple gaming properties under the Station brand throughout the Las Vegas area. The company also runs 10 Wildfire casinos, including seven in Henderson, according to its website. All of the operator’s gaming venues are in the Las Vegas Valley.

Red Rock Resorts Delivers More Income

Red Rock concluded 2023 with $137.6 million in cash on hand and outstanding debt of $3.4 billion. The balance sheet is strong enough to support the new special payout.

The Company’s Board of Directors has declared a special dividend of $1.00 per Class A common share. The dividend will be payable on March 4, 2024 to all stockholders of record as of the close of business on February 22, 2024,” according to the statement.

It’s the operator’s third special distribution since November 2021. That month, Red Rock unveiled a $3 per share unique payout. A year later, the operator delivered a $1 per share special dividend.

Special dividends are one-off payments to investors and offer companies flexibility because those payouts aren’t delivered quarterly, as is the case with traditional distributions by domestic companies.

Durango Might Have Helped Q4

Durango Casino & Resort in Southwest Las Vegas — Red Rock’s newest casino hotel — has been open for just months, meaning it wasn’t a major factor in the company’s fourth-quarter results. But the venue was a contributor.

That’s an encouraging sign, because there some fears that Durango could cannibalize other Red Rock properties. But executives allayed those concerns, recently noting that devotees of the operator’s namesake venue in Summerlin are likely to return to that casino as 2024 unfolds.

Some analysts believe that Durango’s strong start and subsequent follow-through pose more risk to casinos in Southwest Las Vegas operated by rivals than to other Red Rock properties.