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Red Rock Resorts Inc

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Red Rock Resorts Inc AI Insights

Informational only. Not investment advice.
As of 2025-12-10

Snapshot

  • Debt/equity of 15.5x with 3.4B debt vs 220M equity - interest expense (208M TTM) consumes 51% of pretax income[Debt to Equity]
  • Operating margin 30.7% TTM vs industry median 8.2% - 3.7x advantage drives 612M operating income on 2B revenue[Operating Margin TTM]
  • Tangible book value negative (-56M) - 276M intangibles exceed 220M equity, limiting downside protection[Tangible Book Value]

Watch Triggers

  • Interest Expense TTM: Exceeds 250M or >55% of pretax incomeSignals debt burden becoming unsustainable; current 208M already consumes 51% of pretax
  • Free Cash Flow TTM: Falls below 250MWould extend deleveraging timeline beyond 10 years at current debt levels
  • Operating Margin TTM: Drops below 25%Margin compression would erode the core competitive advantage vs peers

Bull Case

Best-in-class margins: 62% gross, 31% operating, 40% EBITDA margins vs industry medians of 52%, 8%, 10% respectively

Operating Margin TTMEBITDA TTMGross Margin TTM

Asset-heavy model (2.9B PPE) creates barriers; 333M FCF TTM = 5.6% yield on 5.9B market cap

Free Cash Flow TTMPPEMarket Cap TTM

Bear Case

Extreme leverage: 15.5x D/E, 4.2x net debt/EBITDA, 208M annual interest - refinancing risk if rates stay elevated

Debt to EquityTotal DebtInterest Expense TTM

EPS declining -7.7% 3Y CAGR despite stable revenue (+4.7% 3Y) - margin compression or rising interest costs

EPS Growth 3yrTotal Revenue 3yr Growth

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
40%

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Forward Thesis

FCF generation (333M TTM) can reduce leverage by 1x annually if prioritized over dividends

1-3ymed
  • FCF margin 16.7% on 2B revenue
  • Capex 269M manageable vs 807M EBITDA
  • Interest coverage 2.9x provides cushion
FCF TTM 333M vs net debt 3.2BEBITDA 807M covers interest 3.9xDividend only 1.00/share (103M annual)

Valuation Context

Caveats

Public Strategies Rankings

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Fundamental company data provided by Morningstar, updated daily.

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