In a recent move, Lorenzo J. Fertitta, Vice President of Red Rock Resorts, Inc. (NASDAQ:RRR), has increased his stake in the company through the purchase of Class A Common Stock valued at a total of $3.38 million. The transactions took place over two consecutive days, with prices ranging from $49.769 to $52.912 per share.
On August 5, 2024, Fertitta acquired 33,000 shares at $49.769 each, followed by an identical number of shares the next day at a higher price of $52.912 per share. These acquisitions have bolstered Fertitta's total ownership to 47,579,301 shares in the gaming and hospitality company.
The stock purchases were made by the Lorenzo J. Fertitta and Teresa Jo Fertitta Family Trust, of which Lorenzo J. Fertitta is a co-trustee, sharing investment and voting power. The trust was established for the benefit of Fertitta and his spouse, Teresa Jo Fertitta.
Fertitta holds a significant position within Red Rock Resorts, serving as a director, officer, and a beneficial owner of more than ten percent of the company's Class A Common Stock. This is inclusive of his interests through FBM Sub 1 LLC, Fertitta Business Management LLC, and FI Station Investor LLC, which are exchangeable for Class A Common Stock or, at the issuer's discretion, cash.
The transactions by Fertitta demonstrate a strong commitment to the company and are likely to be of interest to investors monitoring insider activity. Red Rock Resorts, based in Las Vegas, Nevada, operates in the hospitality and gaming sector, with a focus on providing a premier experience at its properties.
In other recent news, Red Rock Resorts has been making significant strides in its financial performance, notably in its second-quarter 2024 results. The company reported revenue of $486 million and EBITDA of $202 million, exceeding consensus estimates and marking a 3% increase in both metrics. This growth is largely attributed to the successful integration of its Durango property, which is expected to deliver a 20% return on investment in its first year. Additionally, Red Rock Resorts announced plans for a Phase 2 expansion of the Durango property, projected to be completed by the end of 2025.
In a recent development, Macquarie has increased its price target for Red Rock Resorts from $62.00 to $65.00, maintaining an Outperform rating on the stock. This decision follows the company's impressive first-half 2024 results. However, Truist Securities adjusted the price target for Red Rock Resorts to $63.00, down from the previous $64.00, while keeping a Hold rating on the stock.
Red Rock Resorts also returned value to shareholders through a cash dividend of $0.25 per Class A common share and share repurchases totaling approximately $168.5 million in 2024. Despite the positive performance, both Macquarie and Truist Securities expect a 3% decrease in EBITDA for the second half of the year 2024.
InvestingPro Insights
Following the news of Lorenzo J. Fertitta's increased stake in Red Rock Resorts, Inc., current and potential investors may find it valuable to consider some key financial metrics and expert analysis provided by InvestingPro. The company, with a market capitalization of $5.64 billion, is trading at a Price/Earnings (P/E) ratio of 18.43, which has slightly adjusted to 17.65 when looking at the last twelve months as of Q2 2024. This suggests a relatively stable valuation in the eyes of investors.
One standout feature for Red Rock Resorts is its impressive gross profit margin, which stands at 62.81% for the same period. This high margin indicates the company's ability to retain a significant portion of sales as profit after accounting for the cost of goods sold, a testament to its operational efficiency in the competitive gaming and hospitality industry.
Investors should note that Red Rock Resorts has shown a commitment to returning value to shareholders, maintaining dividend payments for 9 consecutive years. The dividend yield as of 2024 stands at 3.72%, with the last dividend having an ex-date of June 14, 2024. This consistent dividend payment could be a reassuring sign for income-focused investors.
However, it is important to be aware of the risks associated with any investment. According to InvestingPro Tips, Red Rock Resorts operates with a significant debt burden and the stock price movements have been quite volatile. This could impact the stability of future earnings and shareholder returns. Additionally, analysts have recently revised their earnings expectations downwards for the upcoming period, which could suggest potential headwinds for the company.
InvestingPro offers additional tips that can provide deeper insights into Red Rock Resorts' financial health and future prospects. With a total of 10 InvestingPro Tips available for Red Rock Resorts, investors can access a more comprehensive analysis to inform their investment decisions. To explore these tips, visit: InvestingPro Red Rock Resorts.
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