Red Rock Resorts Stock Entering S&P Small-Cap Index

• Casino stock entering widely followed small-cap index.
• Promotion is tied to another gaming name.

Shares of Red Rock Resorts (NASDAQ: RRR) rallied Friday on news the casino stock will soon enter the S&P SmallCap 600 Index.

Interestingly, that promotion is somewhat tied to another gaming equity: slot machine manufacturer Light & Wonder (NASDAQ: LNW). That company is leaving the NASDAQ next week for a sole listing in Sydney, creating room in the S&P MidCap 400 Index.

Sterling Infrastructure (NASDAQ: STRL) will replace Light & Wonder in the S&P MidCap 400, and Red Rock Resorts Inc. will replace Sterling Infrastructure in the S&P SmallCap 600 effective prior to the opening of trading on Thursday, November 13. Light & Wonder is expected to delist from the NASDAQ Stock Exchange on or around that date and intends to keep its primary listing exclusively in Australia,” according to a statement issued by S&P Dow Jones Indices.

Red Rock stock, which has been on a torrid run this year, sports a market capitalization of $5.61 billion, which by definition is mid-cap territory. That could be a sign the stock’s time in the small-cap gauge may be brief before it’s promoted to S&P mid-cap indexes, but the index provided did not comment to that effect. Red Rock is already included in the Russell 2000 Index, the primary rival to the S&P gauge.

Why It Matters for Red Rock Resorts Stock

Entering the S&P SmallCap 600 Index is a boon for Red Rock stock because it broadens the field of investors engaged with the name.

That doesn’t include the field of active and passive funds following the growth and value offshoots of the S&P SmallCap 600 that could include shares of Red Rock. In that case, the stock would only be include in one of growth or value and it remains to be seen which one because some small-cap indexes that already include Red Rock classify it is a growth stock while others label it a growth name.

Among small-cap gauges, the S&P index is one of the most widely observed. The three largest ETFs following that index combine for over $102 billion in assets under management.

Red Rock Stock a Wall Street Favorite

At a time when shares of Las Vegas Strip operators are being punished, Red Rock has stood tall thanks to its focus on the Las Vegas locals segment. The shares are up 24% year-to-date, easily outpacing broader measures of gaming and small-cap stocks.

The stock is also a Wall Street favorite with 10 of the 13 analysts covering rating it the equivalents of “strong buy” or “buy.” The consensus price target on Red Rock is $65.85, implying upside of nearly 15% from current levels.