Shares of casino company Red Rock Resorts Inc. (NASDAQ:RRR) jumped as much as 16.5% during trading Wednesday after the company reported first-quarter 2018 results. Shares gave up some of their gains late in the day, and were up 7.2% at 3:50 p.m. EDT.
Revenue fell 1.1% to $421.0 million in the first quarter, primarily due to construction at Palace Station Hotel & Casino and the Palms Casino Resort. Net income rose $36.7 million versus a year ago, to $82.1 million, but was helped by an after-tax gain of $13.3 million in extinguishment of a tax-receivable liability and a $14.3 million gain on interest-rate swaps. Without those gains, net income would have been up $9.1 million versus a year ago.
The top-line performance was really impressive in the first quarter, given the disruption to two major casinos. Analysts had only been expecting $412.9 million in revenue.
Red Rock Resorts is performing well, despite its challenges, and when the Palace Station and Palms resorts reopen completely, the company should see growth pick up again. The Palace Station project will be completed by the end of 2018, but Palms, as part of a $620 million overhaul, will be under construction through the fourth quarter of 2019. Given the strength in gaming in Las Vegas, I think Red Rocks still has a lot of upside, especially when its fleet of hotels is fully operational once more.