Red Rock Resorts Faces 65% Earnings Drop Despite Strong Buy Ratings

Forward-Looking Analysis

Wall Street expects Red Rock Resorts to report a significant year-over-year decline in earnings for the quarter ended June 2026, driven by lower revenues. The Zacks Consensus Estimate projects quarterly earnings of $0.33 per share, representing a sharp -65.3% decrease from the prior year period. Revenue is forecast to be $496.53 million, a 5.7% drop year-over-year. The consensus EPS estimate has been revised 1.72% lower over the last 30 days, reflecting a reassessment of business conditions by covering analysts.

Long-term forecasts from 16 analysts indicate RRR’s earnings will average $2.87 for 2026, $2.90 for 2027, and $3.23 for 2028, implying an annual earnings growth rate of -3.11%. This growth rate is forecast to lag behind the US Resorts & Casinos industry average of 12.12% and the broader US market average of 68.44%. However, revenue is expected to grow at a 3.31% annual rate, slightly outpacing the industry average of 3.29% but trailing the market’s 15.95% growth. Profitability metrics remain strong, with forecast Return on Equity at 236.4% and Return on Assets at 7.99%, both exceeding industry averages.

Analyst sentiment remains predominantly positive, with 15 analysts covering the stock issuing a "Strong Buy" consensus. The average 12-month price target is $70.67, suggesting a 9.66% upside from current levels, with a high target of $78.00 and a low of $62.00. Key recent actions include Barclays maintaining a Strong Buy with a $72 target and Goldman Sachs initiating coverage with a $72 Strong Buy rating. Despite the strong buy ratings, the negative EPS revision trend and underwhelming long-term earnings growth compared to peers present downside risks for the upcoming report.

Historical Performance Review

Red Rock Resorts delivered robust results in its 2026Q1 report, generating $481.10 million in revenue and $82.72 million in net income. The company posted an EPS of $0.74 and achieved a gross profit of $318.60 million. These figures demonstrate strong operational efficiency and profitability despite sector headwinds, establishing a high baseline for the upcoming Q2 expectations.

Additional News

Red Rock Resorts recently announced strong Q2 2025 earnings, reporting an EPS of $0.95 against a consensus of $0.41, significantly exceeding analyst expectations. Following this positive financial disclosure, multiple Wall Street firms adjusted their outlooks. Citizens JMP raised its price target to $64 from $57, while Barclays increased its target to $65 from $62. Susquehanna also upgraded its target to $65 from $52. Additionally, Truist Financial upgraded the stock rating to Buy from Hold in mid-July 2025. These upgrades and target increases reflect heightened confidence in the company’s operational execution and cash flow generation capabilities amidst a volatile consumer discretionary landscape.

Summary & Outlook

Red Rock Resorts exhibits strong profitability with high ROE and ROA, though long-term earnings growth forecasts are weak (-3.11% annually), underperforming industry peers. The upcoming Q2 report faces headwinds from projected revenue and EPS declines. While analyst consensus remains "Strong Buy" with an average target of $70.67, the negative estimate revisions and structural growth challenges suggest a neutral to cautious outlook. Investors should monitor whether Q2 results can defy the downward revision trend to support the current valuation multiple of 19.6x forward P/E.