Value
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.2 |
| P/S | 8.1 |
| EV/EBITDA | 6.4 |
| Fwd P/E | 7.0 |
| PEG | 6.6 |
| Analyst target | 4.0 |
- ▸Forward P/E: 18.2x
- ▸PEG: 1.10
RRR · Why this verdict
Why Red Rock Resorts (RRR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company generated a return on equity of 114%, which ranks it as superior to peers in the sector, reflecting the high-margin, capital-light characteristics of its regional Las Vegas casino operations. Quality breakdown | Return on equity remains above 80% over the next 12 months, sustaining the company's peer-leading profitability profile. | →Stable |
| CounterHigh leverage inflates return on equity mechanically, and the company carries a meaningful debt load that would amplify any revenue decline from a Las Vegas regional demand slowdown. | ||
The company beat earnings estimates in 3 of the last 4 quarters with an average positive surprise of 9.1%, and price momentum is strong with rising on-balance volume and an RSI reading near 68. Earnings | Earnings beats continue in at least 3 of the next 4 quarters and price momentum score remains above 6.0. | →Stable |
| CounterThe most recent quarter's 34% beat followed a significant miss of negative 22.5% in the prior quarter, suggesting uneven execution and volatile consensus estimates rather than a smooth outperformance trend. | ||
The company derives its revenues from the Las Vegas regional market, where it has a concentrated position in slot play representing approximately 80% of gaming revenue, creating a single-region single-product revenue profile. Bear case | Las Vegas regional gaming revenue grows by at least 3% year over year over the next 12 months, supporting the concentrated revenue base. | →Stable |
| CounterGeographic and product concentration means that any demand shock to the Las Vegas regional market or shift in consumer preference away from slot-based gaming would disproportionately impact this company versus more diversified peers. | ||
Short interest is elevated at 14% of float with a put-to-call ratio of 1.41, indicating that a meaningful portion of the market is positioned for a decline, which creates both downside risk and the possibility of a short-squeeze tailwind. Risk breakdown | Short interest falls below 9% within 12 months as the bull case plays out and skeptics reduce bearish positions. | →Stable |
| CounterWith the price already above the analyst consensus target, high short interest may reflect well-informed positioning, and price is trading above the max pain level of $35, suggesting options market participants see downside risk. | ||
The company generated a return on equity of 114%, which ranks it as superior to peers in the sector, reflecting the high-margin, capital-light characteristics of its regional Las Vegas casino operations.
→StableQuality breakdown
- Expectation
- Return on equity remains above 80% over the next 12 months, sustaining the company's peer-leading profitability profile.
CounterHigh leverage inflates return on equity mechanically, and the company carries a meaningful debt load that would amplify any revenue decline from a Las Vegas regional demand slowdown.
The company beat earnings estimates in 3 of the last 4 quarters with an average positive surprise of 9.1%, and price momentum is strong with rising on-balance volume and an RSI reading near 68.
→StableEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters and price momentum score remains above 6.0.
CounterThe most recent quarter's 34% beat followed a significant miss of negative 22.5% in the prior quarter, suggesting uneven execution and volatile consensus estimates rather than a smooth outperformance trend.
The company derives its revenues from the Las Vegas regional market, where it has a concentrated position in slot play representing approximately 80% of gaming revenue, creating a single-region single-product revenue profile.
→StableBear case
- Expectation
- Las Vegas regional gaming revenue grows by at least 3% year over year over the next 12 months, supporting the concentrated revenue base.
CounterGeographic and product concentration means that any demand shock to the Las Vegas regional market or shift in consumer preference away from slot-based gaming would disproportionately impact this company versus more diversified peers.
Short interest is elevated at 14% of float with a put-to-call ratio of 1.41, indicating that a meaningful portion of the market is positioned for a decline, which creates both downside risk and the possibility of a short-squeeze tailwind.
→StableRisk breakdown
- Expectation
- Short interest falls below 9% within 12 months as the bull case plays out and skeptics reduce bearish positions.
CounterWith the price already above the analyst consensus target, high short interest may reflect well-informed positioning, and price is trading above the max pain level of $35, suggesting options market participants see downside risk.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Red Rock Resorts is a momentum-driven Las Vegas regional casino operator with exceptional returns on equity above 100% and a strong earnings beat history, but geographic concentration in a single market and a price that has run to the analyst target leaves the risk/reward unfavorable for new buyers.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.1 |
| Gross margin | 9.5 |
| Op margin | 10.0 |
| Net margin | 4.6 |
| Current ratio | 3.2 |
| FCF quality | 6.5 |
| Moat | 6.4 |
| Rule of 40 | 3.0 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 114%
- ▸Rule of 40: 10 (fail)
- ▸Strong Piotroski F-Score: 7/9
Growth
4.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 5.3 |
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 4.8 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.4 |
| Price target | 5.3 |
| erm sentiment | 5.0 |
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.2 |
| quality rank | 8.0 |
| growth rank | 1.7 |
- ▸Superior ROE vs peers
Technical
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.8 |
| support resistance | 2.1 |
| 52w position | 9.3 |
Risk (lower is worse)
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 5.2 |
| volatility | 4.4 |
| put call | 5.5 |
| implied vol | 0.0 |
| beta | 5.5 |
| debt equity | 0.0 |
- ▸Short squeeze setup: 15% short, quality 7.5
- ▸High IV: 94%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 159.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.1>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.56
Upside
-8.1%
Downside
14.5%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 59, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.37>1.3
Investment implication
The F-path SELL output reflects an overall score of 4.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.56 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.2, Quality at 6.7, and Value at 6.3; the weakest are Risk (lower is worse) at 4.0, Growth at 4.2, and Technical at 4.4. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.56 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Return On Equity
Trip ifReturn on equity falls below 50%, more than 60 percentage points below the current 114% level, signaling a material deterioration in capital efficiency.
- P2Earnings Beat And Momentum Pattern
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters, indicating the beat pattern has broken down.
- P3Las Vegas Market Concentration
Trip ifLas Vegas regional gaming revenue growth falls below 0% year over year for at least 2 consecutive quarters, signaling a regional demand contraction.
- P4Elevated Short Interest Risk
Trip ifShort interest rises above 18% of float, more than 4 percentage points above the current 14%, indicating increased bearish conviction.