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Churchill Downs (CHDN)
NASDAQ:CHDN
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Churchill Downs
(NASDAQ:CHDN)
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Rating:59Neutral
Price Target:
$100.00
▲(11.06% Upside)
Action:ReiteratedDate:02/26/26
The score is held back primarily by elevated balance-sheet risk (high leverage/negative equity signal) and weak technical trend (below key longer-term moving averages with negative MACD). Offsetting factors are strong multi-year profitability and cash generation, plus an upbeat earnings call with concrete 2026 guidance and continued shareholder returns; valuation appears reasonable but not especially supportive via yield.
Positive Factors
Revenue & Margin Track Record
Consistent multi-year revenue and EBITDA expansion signals durable demand across racing, casinos, and wagering. Sustained margins give management flexibility to reinvest in growth, fund capex projects like Rockingham, and support shareholder returns, strengthening competitive positioning.
Free Cash Flow & Capital Returns
Very strong free cash generation provides a lasting source of internal funding for capex, share repurchases, dividends, and debt paydown. Reliable FCF reduces reliance on external financing and supports the company's plan to deleverage while maintaining strategic investments.
Digital Wagering & Product Expansion
Growth in digital wagering and B2B deployments diversifies revenue away from footprint-dependent gaming. Scalable online products (Exacta) and broader HRM/ETG rollouts can improve long-term margins, customer retention, and cross-selling opportunities across states and partners.
Negative Factors
High Leverage & Thin Equity
Elevated leverage and a thin or negative equity cushion materially increase financial risk in a cyclical leisure business. High debt raises interest costs, limits flexibility for downturns or opportunistic investments, and heightens covenant and refinancing sensitivity despite plans to reduce leverage.
2025 Financial Data Inconsistencies
Accounting or reporting inconsistencies in the 2025 income statement impair trend visibility and weaken confidence in underlying performance. This complicates forecasting of sustainable margins and cash conversion, making medium-term planning and evaluation of operational progress less reliable.
Regulatory & iGaming Competition Risk
Regulatory changes and expanded iGaming can structurally alter market access, tax/takeout economics, and competitive dynamics. Adverse legislation or unfavorable rule changes would pressure retail HRM economics, require strategic responses, and could reduce long-term revenue per customer.
Churchill Downs (CHDN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.28B
Dividend Yield0.38%
Average Volume (3M)885.95K
Price to Earnings (P/E)21.2
Beta (1Y)0.69
Revenue Growth7.97%
EPS Growth-0.14%
CountryUS
Employees6,480
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)0.97
Shares Outstanding69,696,370
10 Day Avg. Volume1,187,469
30 Day Avg. Volume885,953
Financial Highlights & Ratios
PEG Ratio-3.29
Price to Book (P/B)-39.77
Price to Sales (P/S)2.76
P/FCF Ratio16.29
Enterprise Value/Market Cap1.71
Enterprise Value/Revenue3.68
Enterprise Value/Gross Profit10.94
Enterprise Value/Ebitda10.05
Forecast
1Y Price Target
$136.60Price Target Upside51.71% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)6.7
Revenue Forecast (FY)$3.04B
Churchill Downs Business Overview & Revenue Model
Company DescriptionChurchill Downs Incorporated operates as a racing, online wagering, and gaming entertainment company in the United States. It operates through three segments: Live and Historical Racing, TwinSpires, and Gaming. As of December 31, 2021, the company owned and operated three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines (HRMs) in Kentucky; TwinSpires, an online wagering platform for horse racing, sports, and iGaming; nine retail sportsbooks; and casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals, and 200 table games. It also offers streaming video of live horse races, replays, and an assortment of racing and handicapping information; and provides the Bloodstock Research Information Services platform for horse racing statistical data. In addition, the company manufactures and operates pari-mutuel wagering systems for racetracks, off-track betting facilities, and other pari-mutuel wagering businesses. Churchill Downs Incorporated was founded in 1875 and is headquartered in Louisville, Kentucky.
How the Company Makes MoneyChurchill Downs generates revenue through multiple streams, primarily from its racetrack operations, online wagering, and casino gaming. Revenue from live racing events, including ticket sales, concessions, and sponsorships, is significant, especially during major events like the Kentucky Derby. The company also earns substantial income from its online wagering platform, which allows customers to place bets on horse races remotely. Additionally, Churchill Downs operates casinos that contribute to its earnings through gaming revenues from slot machines and table games. Strategic partnerships with various stakeholders in the racing and gaming industries further enhance its revenue potential, along with investments in technology to improve customer engagement and increase betting activity.
Churchill Downs Key Performance Indicators (KPIs)
Any
Adjusted EBITDA By Segment
Shows profitability across different segments after removing one-time costs, offering a clearer picture of ongoing operational performance and efficiency.
Shows profitability across different segments after removing one-time costs, offering a clearer picture of ongoing operational performance and efficiency.
Data provided by:
The Fly
The FlyChurchill Downs Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call emphasizes multiple strong positives: record revenue and adjusted EBITDA, robust free cash flow ($700M), successful HRM expansion and technology (Exacta) driving a 7% adjusted EBITDA increase in Wagering Services, significant capital returns to shareholders, and confident forward guidance around the Kentucky Derby (projected $15–$20M incremental adjusted EBITDA) and continued project execution. Offsetting items are largely transitory or execution-timing related: modest margin pressure (-0.8 points) in regional gaming, early-stage ETG rollout, weather and local disruptions, tariff-related sales-cycle volatility earlier in the year, and routine legislative/regulatory uncertainty. Overall, highlights materially outweigh the lowlights and the tone is optimistic regarding 2026 growth and deleveraging.Q4-2025 Updates
Positive Updates
Record Revenue and Adjusted EBITDA
Company reported record net revenue and record adjusted EBITDA for 2025 (also record Q4 net revenue and adjusted EBITDA), marking nine consecutive years of record revenue and adjusted EBITDA excluding 2020.
Kentucky Derby and Derby Week Strength
Generated record handle for the Kentucky Derby race, Derby Day program and Derby Week overall, achieved the highest television ratings in nearly 40 years, and expect the 2026 Derby to deliver $15 million to $20 million of incremental adjusted EBITDA.
Significant Free Cash Flow and Capital Returns
Generated record free cash flow of $700 million ($9.75 per share) in 2025; repurchased more than 4.2 million shares and returned over $456 million to shareholders through repurchases and dividends; 15th consecutive year of dividend per share increases.
HRM Portfolio Expansion and New Investments
Expanded HRM footprint with openings (Owensboro, Marshall Yards, Roseshire) and progress on The Rose; announced $180 million to $200 million investment for Rockingham Grand Casino in Salem, New Hampshire.
Wagering Services Growth (Exacta)
Adjusted EBITDA for the Wagering Services and Solutions segment increased 7% in 2025, driven primarily by growth in Exacta and expanding B2B deployments (new customers in Kansas and Alabama).
Introduction of Electronic Table Games (ETGs)
Received regulatory approval in Kentucky and introduced roulette ETGs in early February, establishing a new product avenue expected to augment HRM offerings and future ETG development (e.g., potential craps and blackjack).
Operational Enhancements at Churchill Downs Racetrack
Completed renovations (starting gate Pavilion for ~8,100 guests, redesigned Paddock) and ongoing projects (Mansion renovation, Finish Line Suites on time/on budget) with Victory Run project to add ~1,400 seats (22% increase in that area).
Disciplined Capital Allocation and Leverage Profile
Maintenance capex was $70 million in 2025 (expect $90–$110 million in 2026); project capex $205 million in 2025 (expect $180–$220 million in 2026); bank covenant net leverage 4.1x at year-end 2025 and expected to decline below 4.0x during 2026.
Negative Updates
Earnings Slightly Below Prior Year Record
While 2025 produced record revenue and adjusted EBITDA overall, the company noted being just below the prior year's record earnings level, citing challenging comparisons and economic uncertainty earlier in the year.
Tariff-Related Volatility and Early-2025 Uncertainty
The sales process for certain events was disrupted by tariff-related volatility and broader economic uncertainty during the later part of the sales cycle, which impacted the cadence of revenue generation earlier in 2025.
Regional Gaming Margin Pressure
Full-year 2025 same-store wholly owned casino margins (excluding racing) declined modestly by 0.8 percentage points versus 2024, primarily reflecting performance in Mississippi and some temporary local headwinds.
Operational Disruptions from Weather and Local Factors
Significant January weather events and localized disruptions (e.g., roadwork, local curfews in Mississippi, weather impacts in December) caused short-term impacts in some markets, though underlying demand showed resilience.
Gradual Rollout and Early-Stage ETG Deployment
ETGs are in the early implementation phase (roulette first) and will be rolled out cautiously; incremental contribution to 2025 results was nil, and future benefits will accrue over time as products are expanded and tested.
Regulatory and Legislative Risk (iGaming/Competition)
Ongoing legislative activity (e.g., discussions of iGaming in Virginia) represents regulatory uncertainty and potential competitive risk; management views iGaming as unfavorable to their Virginia operations and is monitoring the process.
Company Guidance
The company guided to several concrete 2026 metrics: the Kentucky Derby is expected to drive $15 million–$20 million of incremental adjusted EBITDA, Derby Week will expand to 7 live race dates across 8 calendar days with week attendance ~75,000 and the Derby pacing ahead of prior years, and Rockingham Grand Casino investment is expected to be $180 million–$200 million (project capex outlook for 2026 overall $180 million–$220 million). Maintenance capital is forecast at $90 million–$110 million (vs. $70 million in 2025), bank covenant net leverage was 4.1x at 12/31/25 and is expected to decline below 4.0x during 2026, and the company reiterated strong cash generation after delivering record free cash flow of $700 million ($9.75 per share) in 2025; other 2025 metrics cited for context include record net revenue and adjusted EBITDA, project capex of $205 million, >4.2 million shares repurchased and >$456 million returned to shareholders, Wagering Services adjusted EBITDA up 7%, and same-store regional casino margins down ~0.8 points.Churchill Downs Financial Statement Overview
Summary
Income statement strength (74) reflects solid 2021–2024 revenue growth and strong margins, and cash flow is generally supportive (62) with consistently positive operating cash flow. However, the balance sheet is a major drag (38) due to high leverage and thin/negative equity in the latest snapshot, and 2025 annual income-statement field inconsistencies reduce confidence in the most recent trend.Income Statement
From 2021–2024 the company delivered solid top-line momentum (revenue growth of ~51% in 2021, ~13% in 2022, ~36% in 2023, and ~11% in 2024) with consistently strong profitability in those years (net margin generally mid-teens; EBITDA margin near ~39–48%). A key weakness is the 2025 annual data quality/signals: revenue and operating profit fields are shown as zero with a -100% growth rate while net income remains positive, which creates a sharp reported discontinuity and reduces confidence in the latest-period trend.74
Positive
Balance Sheet
Leverage is high on the annual reports through 2024 (debt to equity roughly ~4.5x in 2024 and higher in prior years), which can amplify risk in a cyclical/leisure business. The 2025 annual snapshot is more concerning, showing negative equity alongside meaningful debt, implying a weakened capital cushion and higher balance-sheet risk despite historically strong returns on equity in 2021–2024. Overall, the balance sheet is the weakest pillar due to heavy debt and thin/negative equity.38
Negative
Cash Flow
Operating cash flow has been consistently positive since 2021 and improved meaningfully versus 2020, supporting earnings quality. Free cash flow is more volatile (negative in 2020 and 2023, positive in 2021, 2022, and 2024), indicating swingy reinvestment or working-capital dynamics. The 2025 annual data shows unusually strong cash generation (operating and free cash flow both ~770M and up ~30%), but given inconsistencies in the 2025 income statement fields, this strength should be viewed with some caution.62
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.93B | 2.73B | 2.46B | 1.81B | 1.60B |
| Gross Profit | 982.60M | 938.50M | 795.70M | 566.40M | 446.10M |
| EBITDA | 1.07B | 1.07B | 1.01B | 875.10M | 536.80M |
| Net Income | 379.70M | 426.80M | 417.30M | 439.40M | 249.10M |
Balance Sheet | |||||
| Total Assets | 688.70M | 7.28B | 6.96B | 6.21B | 2.98B |
| Cash, Cash Equivalents and Short-Term Investments | 288.50M | 175.50M | 144.50M | 129.80M | 291.30M |
| Total Debt | 802.50M | 4.92B | 4.84B | 4.61B | 1.97B |
| Total Liabilities | 891.40M | 6.17B | 6.06B | 5.66B | 2.67B |
| Stockholders Equity | -202.70M | 1.08B | 893.60M | 551.50M | 306.80M |
Cash Flow | |||||
| Free Cash Flow | 494.90M | 225.70M | -70.70M | 80.00M | 243.70M |
| Operating Cash Flow | 769.80M | 772.70M | 605.80M | 536.80M | 335.50M |
| Investing Cash Flow | -471.50M | -545.20M | -718.00M | -3.10B | -100.40M |
| Financing Cash Flow | -262.50M | -196.60M | 129.30M | 2.42B | -500.00K |
Churchill Downs Technical Analysis
Negative
90.04
Price Trends
101.01
Negative
102.17
Negative
101.21
Negative
Market Momentum
-2.30
Negative
38.41
Neutral
51.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHDN, the sentiment is Negative. The current price of 90.04 is below the 20-day moving average (MA) of 92.71, below the 50-day MA of 101.01, and below the 200-day MA of 101.21, indicating a bearish trend. The MACD of -2.30 indicates Negative momentum. The RSI at 38.41 is Neutral, neither overbought nor oversold. The STOCH value of 51.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CHDN.
Churchill Downs Risk Analysis
Churchill Downs disclosed 29 risk factors in its most recent earnings report. Churchill Downs reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Churchill Downs Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.19B | 3.78 | 87.98% | 0.84% | 5.91% | 336.91% | |
70 Outperform | $6.28B | 19.42 | 88.84% | 3.22% | 4.69% | 15.18% | |
62 Neutral | $9.50B | 46.86 | 7.74% | ― | 0.05% | -94.07% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $6.28B | 21.23 | 36.28% | 0.38% | 7.97% | -0.14% | |
56 Neutral | $10.99B | 38.12 | ― | 0.80% | -0.26% | -44.45% | |
50 Neutral | $5.41B | -9.69 | -13.11% | ― | 0.87% | 31.28% |
* Consumer Cyclical Sector Average
CHDN
Churchill Downs
90.04
-21.53
-19.29%
BYD
Boyd Gaming
82.03
13.65
19.97%
MGM
MGM Resorts
37.13
5.10
15.92%
WYNN
Wynn Resorts
105.37
17.45
19.85%
CZR
Caesars Entertainment
26.59
-1.89
-6.64%
RRR
Red Rock Resorts
59.80
15.33
34.47%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.