Red Rock Resorts CEO acquires $6.88 million in company stock

Published 08/08/2024, 10:06 am
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In a recent move, Frank J. Fertitta III, Chief Executive Officer of Red Rock Resorts, Inc. (NASDAQ:RRR), has increased his stake in the company through a series of stock purchases. The transactions, which took place on August 5th and 6th, amounted to a total of $6.88 million, highlighting the CEO's growing investment in the casino and resort operator.

According to the details of the purchases, Fertitta acquired shares at prices ranging from $49.769 to $52.912. The acquisition involved a total of 134,000 shares of Class A Common Stock across four separate transactions. On August 5th, two purchases were made, one for 50,000 shares and another for 17,000 shares, both at the lower price point of $49.769. The following day, Fertitta continued to buy, with two more transactions of 17,000 and 50,000 shares, this time at the higher price of $52.912.

The nature of the ownership is indirect, with shares acquired by trusts for which Fertitta has significant control and influence. These trusts include The Frank J. Fertitta, III and Jill Ann Fertitta Family Trust, and the Lorenzo J. Fertitta 2006 Irrevocable Trust, among others. Post-transaction, Fertitta's indirect ownership in Red Rock Resorts has reached an impressive 46,115,301 shares.

Investors often keep a close eye on insider transactions like these, as they can be indicative of the executives' confidence in the company's future performance. The substantial investment by Red Rock Resorts' CEO certainly presents a positive signal to the market.

In other recent news, Red Rock Resorts has been experiencing significant developments. The company's first-half 2024 results revealed a strong performance, with the second-quarter revenue reaching $486 million and EBITDA of $202 million. This was largely attributed to the successful integration of its Durango property, which is expected to deliver a 20% return on investment in its first year.

Macquarie raised Red Rock Resorts' price target from $62.00 to $65.00, maintaining an Outperform rating on the stock. This decision was influenced by the company's impressive development pipeline and the quality of its assets. However, Truist Securities adjusted the price target down to $63.00 due to valuation concerns, despite acknowledging Red Rock Resorts' operational strengths.

Red Rock Resorts also announced plans for a Phase 2 expansion of the Durango property, expected to be completed by the end of 2025. The company's Las Vegas EBITDA is projected to grow from more than $800 million in 2024 to over $1.2 billion by 2030, based on the company's strategic land holdings and its ability to leverage the increasing population and income in its operating regions.

Despite the positive performance, both Macquarie and Truist Securities expect a 3% decrease in EBITDA for the second half of the year 2024. These recent developments underline Red Rock Resorts' strategic growth initiatives and its commitment to delivering value to its investors.

InvestingPro Insights

In light of Frank J. Fertitta III's recent stock purchases in Red Rock Resorts, Inc., analyzing the company through the lens of InvestingPro data and tips can offer investors a deeper understanding of its financial health and future prospects. Red Rock Resorts boasts a solid market capitalization of $5.64 billion, reflecting its substantial presence in the casino and resort industry. The company's gross profit margin stands at an impressive 62.81%, indicating a robust ability to control costs and generate revenue efficiently.

InvestingPro Tips highlight that Red Rock Resorts operates with a significant debt burden, which investors should consider when evaluating the company's financial stability. However, the company's sustained ability to maintain dividend payments for nine consecutive years demonstrates a commitment to returning value to shareholders. Additionally, Red Rock Resorts' stock price has experienced volatility, which could present opportunities for investors with a tolerance for risk and an eye for timing the market.

From a valuation standpoint, Red Rock Resorts is trading at a high Price / Book multiple of 41.38, suggesting that the market currently assigns a premium to the company's assets relative to its book value. This premium may be justified by the company's profitability over the last twelve months and the strong return over the last five years, as noted in the InvestingPro Tips.

For those interested in further insights, InvestingPro offers additional tips on Red Rock Resorts, which can be accessed through the dedicated page for the company at https://www.investing.com/pro/RRR. These tips can provide investors with a more comprehensive analysis and aid in making informed investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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