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Red Rock Resorts, Inc. (RRR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Red Rock Resorts, Inc. (RRR)

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Intrinsic Value (DCF)

Current$63.56
→
Intrinsic$12.07
-81%
0
$0.00$12.07$38.29
Market implies 28% growth for 5 years
Current price reflects execution expectations above 8% growth — not unreasonable for quality businesses.
At $64, the market prices in continued strong cash flow growth (28%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Current price reflects assumptions at the upper end of our valuation range (bull case: $38).
Discount ↓Growth →4%6%8%10%
8%$20$25$30$35
10%$5$9$12$16
12%$0$0$2$5
14%$0$0$0$0

Bull Case

  • Bull case ($38) with 10% growth, 9% discount rate
  • Conservative 8% growth assumption is achievable based on track record

Bear Case

  • Price reflects 28% growth expectations vs 8% historical — high bar to clear
  • Trading 81% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($38) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$269.37M
Year 2$290.92M
Year 3$314.20M
Year 4$339.33M
Year 5$366.48M
Terminal$5.39B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$249.42MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is RRR stock undervalued or overvalued?
🔴 OVERVALUED

RRR trades at $63.56 vs. our DCF-derived intrinsic value of $12.07, implying -81% downside. Using a 10.0% WACC and 8.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($28.17) suggests limited upside.

What is RRR's intrinsic value?

Using a 5-year DCF model: Base FCF of $249M, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.28B net debt and dividing by 0.10B shares: Bear $0.03 | Base $12.07 | Bull $28.17. Current price $63.56 implies -81% to base case.

How is RRR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($4.53B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.2x.