RED ROCK RESORTS, INC. (RRR): what the price assumes

boothcheck covers RED ROCK RESORTS, INC. (RRR) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/RRR

Headline

FieldValue
TickerRRR
CompanyRED ROCK RESORTS, INC.
Current price$60.96/sh
CompositionCasino 67% / Food and beverage 18% / Room 9% / Development fees 1% / Other 5%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)14.1%
Operating margin today29.0%
Margin compression (value-band)-14.9pp
Multiple paid12x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 8% cost of capital with 4% terminal growth over a 5-year stage.

Reconcile: at the x-ray's 9.3% required return this reads ~1.1%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.29σ
cohort percentile (of 214 peers)23
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.43x4expensive
Earnings0.61x3justifies
Relative0.72x5justifies
Growth0.91x3justifies

Families that justify the price: Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.3%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
DCF Exit MultipleGrowth$67.170.91xyesExit EV/EBITDA: 6.9x / 8.9x / 10.9x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$80.460.76xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.2x / 18.0x / 20.8x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$179.950.34xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$33.911.80xyesBV/sh $2.40, ROE (TTM) 130.5%, ke 9.3%
Two-Stage Excess ReturnAsset$380.060.16xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$44.671.36xyesRev $2.0B, growth 4% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.8x / 2.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$73.540.83xyesEPS $3.10, growth 24% (input: historical EPS growth), PEG=0.82 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$102.750.59xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.58B × (1−14%) / WACC 5.3% → EPV (no growth)
Residual IncomeAsset$57.811.05xyesBV $2.40 + 5yr PV of (ROE (TTM) 130.5% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$12.954.71xyes√(22.5 × EPS $3.10 × BVPS $2.40) — Graham's conservative floor
EV/EBITDA RelativeRelative$102.410.60xyesEBITDA $0.79B × sector EV/EBITDA 12.0x
FCF YieldEarnings$0.016096.00xyesFCF $255.1M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.016096.00xyesSBC-adj FCF $0.22B (FCF $0.26B − SBC $0.03B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings$100.030.61xyesEPS $3.10 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$1.5938.34xyesBV $2.40 × (ROIC 3.5% / WACC 5.3%) (excluded from median)
P/Sales SectorRelative$85.100.72xyesRevenue $2.02B × sector P/S 2.5x
PEG Fair ValueRelative$110.310.55xyesEPS $3.10 × (PEG 1.5 × growth 23.7% (input: historical EPS growth)) → PE 35.6x
Earnings YieldEarnings$33.511.82xyesEPS $3.10 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$3.5b
Net debt / NOPAT (after-tax)6.84x
Net debt / operating income (pre-tax)5.91x
Interest coverage2.9x
Share count CAGR (buyback)-13.8%
Burning cashno

Bullet Takeaways

Bull Case

The clearest signal Red Rock sends is how aggressively it is shrinking its own share count. The count has fallen about 14% a year, which is not ordinary buyback maintenance; it is a controlling family steadily concentrating its ownership of a business it believes is worth more than the market pays. When insiders retire one in seven shares annually, the per-share claim on the same casino cash flow rises fast, and the dividend, declared at $0.26 per Class A share for the second quarter, layers a cash return on top.

What backs that confidence is a genuinely dominant local franchise. Red Rock is the leading operator in the Las Vegas locals gaming market, with seven major resorts and eighteen outlets serving residents rather than tourists, which is a steadier customer than the Strip's convention-and-travel demand. That position produces a 29% operating margin on about $2.0 billion of revenue. The locals market also has a structural moat the filing makes explicit: Nevada's SB 208 created limited gaming-enterprise districts, so new competing casinos cannot simply be built anywhere, which protects the incumbents' real estate.

The growth is being funded out of that franchise. Renovations at Durango and Green Valley Ranch are pressuring near-term EBITDA but are meant to lift future returns, and the company is building a $385 million Durango North expansion plus a new tribal casino in Central California due to open late 2026. The value methods broadly support the price already, with earnings-power, peer-multiple, and growth lenses landing at or above it, so the bull case does not require a re-rating; it requires the new properties to ramp and the buyback to keep compounding the per-share math.

Bear Case

The structural truth a holder has to face is the debt. Net debt is about $3.47 billion, roughly 5.9 times operating income, and interest is covered only about 2.9 times. That is a thin cushion, and it is thin on purpose: the aggressive buyback that makes the bull case is partly financed by carrying that leverage rather than paying it down. A levered equity returns more when the casinos do well and falls harder when they do not, and at 2.9 times coverage there is little room for a downturn before the interest bill starts crowding out the capital return.

The revenue is also more concentrated than a national operator's. The filing notes that Red Rock's casinos "draw a substantial number of customers from the Las Vegas metropolitan area", which is the same locals base that is the moat in good times and the single point of failure in bad ones. A Las Vegas employment or housing shock hits Red Rock's whole portfolio at once, with no geographic diversification to absorb it. And the moat cuts both ways: the same filing warns that "major additions, expansions or enhancements of existing properties or the construction of new properties by competitors could have a material adverse effect on our business", so a rival building in an open gaming district is a direct threat.

The near-term numbers already show the strain. Q1 2026 net income fell 4.2% to $42.9 million and adjusted EBITDA slipped to $212.6 million from $215.1 million a year earlier, as renovation disruption pressured margins. The development pipeline that funds the growth, $385 million for Durango North plus the California project, is real capital going out the door against a balance sheet that is already stretched. The price rests on value support rather than a growth premium, so the bear is not that it is wildly overvalued; it is that a concentrated, levered casino operator carrying its leverage into a heavy spending cycle has a narrower margin for error than the multiple suggests.

Valuation

At about 12 times operating income, the price is undemanding to the point of being a value bound rather than a growth bet. The multiple is low enough that the price sits below what even a modest operating-profit decline would warrant, so the market is not paying for Red Rock to grow; it is paying a discount that assumes some erosion. Against a current operating margin of 29%, that is a cautious price, and the caution is almost certainly about the leverage and the near-term renovation drag rather than the quality of the franchise.

The methods confirm the value read. The earnings-power, peer-multiple, and forward-growth families all land at or above the price, with only the asset-value lens sitting modestly higher, so there is no growth premium embedded that needs defending. The peer-multiple lens, for instance, blends toward a sector earnings multiple near 18 times while the stock trades well below that. In a casino operator, the cleaner way to read the price is on enterprise value to EBITDA, where the comparison still leaves Red Rock looking inexpensive relative to its sector. The price is a discount to value, not a premium on optionality.

The reason for the discount is solvency, and it is the load-bearing point. Net debt of about $3.47 billion is roughly 5.9 times operating income with interest covered only about 2.9 times, the tightest coverage in this peer set, and the company is spending heavily on Durango North and a California project at the same time. The falling share count, down about 14% a year, is real per-share accretion, but it is being achieved alongside that leverage rather than after deleveraging. What a buyer underwrites here is a cheap, dominant locals franchise whose return swings on whether the casinos can carry the debt through a development cycle.

Catalysts

Q1 2026 was a transition quarter, with growth investment pressuring the current numbers. Net revenue rose 1.9% to $507.3 million and diluted EPS of $0.73 narrowly beat the $0.71 estimate, but net income fell 4.2% to $42.9 million and adjusted EBITDA slipped to $212.6 million from $215.1 million a year earlier. Management attributed the softness to renovations at Durango and Green Valley Ranch, disruption it frames as short-term pain for future gain.

The forward catalysts are the development projects. Red Rock is building a $385 million Durango North expansion and a new tribal casino in Central California expected to open in late 2026, the two additions meant to drive the next leg of growth. The board also declared a $0.26 per Class A share dividend for the second quarter, payable June 30, 2026, continuing the capital-return cadence alongside the heavy buyback.

What to watch is the ramp of the new and renovated properties against the leverage, and whether EBITDA reaccelerates once the renovation disruption clears. A clean opening for the California casino and a margin recovery at Durango would be the upside; continued EBITDA softness while the debt and capital spend stay high is the risk. The next earnings print tests whether the short-term drag is in fact short-term.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Red Rock Resorts Q1 2026 earnings release, April 2026

View the full interactive RRR report on boothcheck