The locals casino market, resilient through 2026, strengthens Red Rock Resorts stock, according to CBRE’s updated stock-price target. Traditionally, the Las Vegas Strip draws more attention, but the regional market proves to be a hidden gem. For more insights into Las Vegas casinos, read our las vegas casinos winning strategies article.
Locals Casino Market Outperforms Las Vegas Strip
John DeCree, CBRE’s director of equity research, conveyed confidence in Red Rock Resorts in a recent note to investors. He highlighted the company’s robust position following discussions with their management team at the Durango Casino & Resort. Despite concerns over the Las Vegas Strip’s traffic, DeCree emphasized the steady performance of the past years in the locals casino market.
DeCree mentioned Red Rock as one of the best investments in the gaming sector. This stems from their multi-year growth plans and a prime position in this compelling market. According to DeCree, the locals market could withstand economic downturns now more than in the 2007-08 recession, thanks to a diversified economy and better supply-demand dynamics.
Key Developments for Red Rock Resorts
Seasonal trends will bring a typical slowdown, yet DeCree found no cracks in Red Rock’s core consumer demographics. June marks significant trends as Las Vegas heat kicks in and schools adjourn, signaling some seasonal movement. Nonetheless, demand stays robust.
Gaming revenues for local casino operations rose by 3.2% yearly in April. The projected second-quarter EBITDA stands at $193.5 million for Red Rock Resorts, factoring in some interruptions from capital expenditure projects for 2023. These projects appear to peak in the third quarter.
Red Rock’s strategy includes Durango expansion, reinvestments in key sites, new developments in North Fork, and access to over 450 acres of land in Las Vegas Valley. Most of these lands are ready for development once other projects clear up. While many casino operators focus on extensive, long-term developments, Red Rock’s approach provides consistent growth.
The $180 million Durango expansion, Sunset Station upgrades, and Green Valley Ranch refurbishments should finish by 2025. Returns are anticipated to start in 2026, complemented by North Fork’s tribal development mid-year. Over time, Red Rock will likely choose its next significant endeavor between continuous Durango phases or sites in different Las Vegas locales.
Casino Investments and Future Outlook
With a possible reveal on future projects in early 2026, Red Rock could cover most expenses from operating cash flow, reducing risk and ensuring shareholder returns. The Las Vegas population has grown 30% since 2007, while locals’ gaming positions have contracted, lowering gaming density and increasing demographic income.
Year-to-date, Red Rock’s stock has risen around $5, nearing $50, with a 52-week window ranging from a $35.09 low to a $61.73 high. DeCree has maintained a Buy rating, adjusting the price target to $57 based on updated fiscal projections.
For more great insights into the gaming industry, visit the American Gaming Association site to learn more about current gambling trends.
