Red Rock Resorts’ first quarter results were met with a significant negative market reaction, reflecting investor concerns about margin declines and ongoing construction-related disruption. Management attributed the quarter’s performance to continued growth in gaming and non-gaming segments, especially at Durango and core Las Vegas properties, but acknowledged that temporary construction projects and external headwinds, such as higher gas prices and air travel disruptions in March, impacted results. Chief Financial Officer Stephen Cootey highlighted, “We did experience significant traffic disruption in the first quarter,” noting that the company’s ability to manage these headwinds was key to maintaining near record operating results.
Is now the time to buy RRR? Find out in our full research report (it’s free for active Edge members).
Red Rock Resorts (RRR) Q1 CY2026 Highlights:
- Revenue: $507.3 million vs analyst estimates of $506.6 million (1.9% year-on-year growth, in line)
- Adjusted EPS: $0.78 vs analyst estimates of $0.75 (4.1% beat)
- Adjusted EBITDA: $212.6 million vs analyst estimates of $217 million (41.9% margin, 2% miss)
- Operating Margin: 28.5%, down from 31.1% in the same quarter last year
- Market Capitalization: $3.05 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Red Rock Resorts’s Q1 Earnings Call
- Zachary Silverberg (Wells Fargo): Asked about quantifying disruption from higher gas prices and air travel. CFO Stephen Cootey replied that elevated gas prices had minimal impact and air travel disruptions were not material due to the regional nature of most guests.
- Barry Jonas (Truist Securities): Sought clarity on construction disruption at Durango and its timeline. Cootey estimated $2–3 million in disruption costs would persist through the main construction phase, lasting into 2027.
- Joseph Stauff (Susquehanna): Inquired about the status of greenfield development projects and potential timing. Board member Lorenzo Fertitta explained that while progress is ongoing, visibility on new project announcements will improve by next year.
- John DeCree (CBRE): Probed the drivers behind EBITDA margin declines and whether they are transitory or structural. Cootey attributed the majority of margin pressure to temporary disruption, particularly at Green Valley Ranch, and cited higher utility costs.
- David Katz (Jefferies): Asked about trends in discretionary spending and lower-tier customer segments. COO Scott Kreeger highlighted strong performance in food and beverage as a sign of healthy discretionary spending and emphasized the company’s focus on value offerings across demographics.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will be watching (1) the pace at which construction disruptions are offset by increased visitation and spending at upgraded properties, (2) the ramp-up of new developments like Durango North and North Fork, and (3) how management uses its database and marketing strategies to retain and recapture customers during ongoing property enhancements. The evolution of margin trends as renovations conclude and new amenities come online will also be an important marker of success.
Red Rock Resorts currently trades at $52.94, down from $56.06 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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