Casino resort and entertainment company Red Rock Resorts (NASDAQ:RRR) reported Q1 CY2025 results exceeding the market’s revenue expectations , with sales up 1.8% year on year to $497.9 million. Its GAAP profit of $0.75 per share was 54.4% above analysts’ consensus estimates.
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Red Rock Resorts (RRR) Q1 CY2025 Highlights:
Company Overview
Founded in 1976, Red Rock Resorts (NASDAQ:RRR) operates a range of casino resorts and entertainment properties, primarily in the Las Vegas metropolitan area.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Red Rock Resorts’s 1.7% annualized revenue growth over the last five years was weak. This fell short of our benchmarks and is a tough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Red Rock Resorts’s annualized revenue growth of 7.2% over the last two years is above its five-year trend, but we were still disappointed by the results. Note that COVID hurt Red Rock Resorts’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.
This quarter, Red Rock Resorts reported modest year-on-year revenue growth of 1.8% but beat Wall Street’s estimates by 0.6%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Red Rock Resorts’s operating margin has been trending down over the last 12 months, but it still averaged 30.8% over the last two years, elite for a consumer discretionary business. This shows it’s an well-run company with an efficient cost structure.
This quarter, Red Rock Resorts generated an operating profit margin of 31%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Red Rock Resorts’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
In Q1, Red Rock Resorts reported EPS at $0.75, up from $0.41 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Red Rock Resorts’s full-year EPS of $1.82 to shrink by 1.2%.
Key Takeaways from Red Rock Resorts’s Q1 Results
We were impressed by how significantly Red Rock Resorts blew past analysts’ EPS expectations this quarter. We were also glad its revenue and EBITDA beat. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $42.27 immediately following the results.
Red Rock Resorts may have had a good quarter, but does that mean you should invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free .