Red John Rock Resorts (NASDAQ:RRR) posted another set of impressive perimeter gains in the quaternary quarter, prompting i psychoanalyst to say the buy in could be undervalued if that trend continues.

In the lowest ternion months of 2021, Red River John Rock earned $1.66 a percentage on revenue of $422.35 million. Wall Street expected earnings per portion of 52 cents on sales of $409.04 million. That’s an telling beat, and has the buy in higher past almost quaternity percent in midday trading.

After a diminution inward the tertiary quarter, Red John Rock margins resumed accelerating in the Oct through Dec point — an impressive feat, when factoring inward the egress of the omicron variant of the coronavirus and relieve lingering block out mandates inwards Nevada.

It would experience been interesting to consider what margins would have looked like under a to a greater extent normalized environment. Longer full term we persist in to believe spending/visitation trends testament remain comparatively good for you(p) across the Las Vegas locals,” said Stifel analyst Steven Wieczynski inward a remark to clients.

He rates Red River John Rock “neutral,” with a $55 damage target, downwards from $58. That new forecast implies upside of to a greater extent than 27 percent from the Feb. 2 close.

Loving Las Vegas Locals

In addition to its eponymous casino-resort and William Green Valley Ranch, Red Rock operates heptad casinos below the Stations brand, septet Wildfire venues, and several other locals-focused venues, all of which are strewn crossways Las Vegas Valley.

Las Vegas locals include a variety of customers, spanning staffers from Strip casinos to well-heeled retirees that moved to Silver State to savour a let down cost of living. While unemployment trends are improving inward Las Vegas, Nevada stock-still has the second-worst jobless rank inward the country, tracking only California. Wieczynski believes firmness inwards some local segments would bolster up the pillowcase for Red River John Rock shares sledding forward.

“While the Las Vegas saving has undoubtedly diversified since the Great Recession, and a growing retiree mean has made Locals operators less drug-addicted on service/construction employees, we persist in to believe the fiscal wellness of the latter segment needs to follow restored inward tell for RRR to prosper from here on out,” says the analyst.

He adds that still, slake convening concern could nowadays headwinds to Red Rock’s namesake locus in Summerlin and Green River Valley Ranch this year.

Red Rock’s Fiesta Henderson, Fiesta Rancho, and TX Station remain closed. On the company’s earnings conference call, CFO Sir Leslie Stephen Cootey said the operator is only going to reopen “properties we’re sure-footed we can buoy pitch incremental value to the overall portfolio.”

Red Rock Stock Could Be Undervalued

Shares of Red River Rock are up 92.33 percent o'er the past tense year and with macroeconomic factors stock-still hampering the Las Vegas region, investors may need to live patient with the stock.

Wieczynski notes 2023 could follow the yr inward which Red River Rock posts notable gains, but adds pullbacks nowadays buying opportunities.

“At this point, we believe any type of material tieback inwards RRR shares would make us to reevaluate our neutral stance. We believe this story becomes to a greater extent attractive past the daytime and piece we mock up a retardation inward margins moving send on if we are wrong, shares are massively undervalued at stream levels,” he said.