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Churchill Downs (CHDN)
NASDAQ:CHDN
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Churchill Downs
(NASDAQ:CHDN)60Neutral
Positive Factors
Financial Performance
CHDN delivered better-than-expected top line of $624.2m and adjusted EBITDA of $236.6m, leading to a constructive forward commentary.
Growth Potential
The expectation is that Rose ramps up to around 40%, indicating potential growth in margins through the year.
Negative Factors
Market Competition
Weakness at Rivers Casino, likely due to competition, pressured margins.
Churchill Downs (CHDN) vs. S&P 500 (SPY)
Market Cap
$8.42B
Dividend Yield0.36%
Average Volume (3M)605.80K
Price to Earnings (P/E)20.2
Beta (1Y)0.97
Revenue Growth11.07%
EPS Growth3.32%
CountryUS
Employees8,870
SectorConsumer Cyclical
Sector Strength53
IndustryHotels, Lodging & Leisure
Share Statistics
EPS (TTM)5.68
Shares Outstanding73,548,065
10 Day Avg. Volume671,859
30 Day Avg. Volume605,805
Financial Highlights & Ratios
PEG Ratio6.07
Price to Book (P/B)N/A
Price to Sales (P/S)3.15
Price to Cash Flow (P/CF)12.40
P/FCF Ratio21.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$162.57Price Target Upside45.15% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Churchill Downs Business Overview & Revenue Model
Company DescriptionChurchill Downs Incorporated (CHDN) is a leading racing, online wagering, and gaming entertainment company in the United States. The company is best known for its iconic horse racing track, Churchill Downs, which hosts the renowned Kentucky Derby. In addition to horse racing, Churchill Downs Incorporated operates a suite of gaming operations, including casinos and historical racing machines, and offers online wagering platforms through its TwinSpires brand.
How the Company Makes MoneyChurchill Downs Incorporated generates revenue through several key streams. The primary source of income is from its live horse racing events, most notably the Kentucky Derby, which draws significant attendance and wagering activity. Additionally, the company benefits from media rights and sponsorship deals associated with these events. Another substantial revenue stream comes from its gaming operations, which include casinos and historical racing machines located across various properties in the U.S. These facilities offer slot machines, table games, and other gaming options. Furthermore, Churchill Downs Incorporated capitalizes on the growing trend of online wagering through its TwinSpires platform, which allows users to bet on horse races and other sports events. The company also engages in strategic partnerships and acquisitions to expand its portfolio and enhance its service offerings, contributing to its overall profitability.
Churchill Downs Financial Statement Overview
Summary
Churchill Downs demonstrates robust revenue growth and operational profitability, with strong cash flow generation. However, the balance sheet reveals significant financial risk due to high debt levels and negative equity. While the company is managing cash effectively, the financial instability due to leverage poses considerable risks.Income Statement
Churchill Downs has exhibited strong revenue growth over the past few years, with a 11.07% increase from 2023 to 2024. The company maintains a robust gross profit margin, achieving 100% in 2024, which highlights efficient cost management. However, the net profit margin decreased slightly from 2023 to 2024 (from 16.95% to 15.61%), indicating increased expenses or other financial pressures. EBIT and EBITDA margins are high at 25.93%, suggesting solid operational profitability.75
Positive
Balance Sheet
The debt-to-equity ratio is concerning, as Churchill Downs has negative equity in 2024, indicating financial instability. The company's liabilities exceed its assets, leading to a negative stockholders' equity. This situation poses a significant risk and suggests potential liquidity issues. The equity ratio is negative, indicating heavy reliance on debt financing, which could be detrimental in adverse economic conditions.45
Neutral
Cash Flow
Churchill Downs has achieved a substantial increase in free cash flow from negative in 2023 to positive in 2024, indicating improved cash generation capability. The operating cash flow to net income ratio is strong at 1.81, reflecting efficient cash management. However, the free cash flow to net income ratio is 1.81, signaling good cash conversion but also highlighting the need for cautious cash flow management given the high leverage.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.73B | 2.46B | 1.81B | 1.60B | 1.05B | Gross Profit |
| 938.50M | 795.70M | 566.40M | 446.10M | 193.50M | EBIT |
| 709.00M | 564.00M | 561.90M | 451.50M | 106.50M | EBITDA |
| 1.07B | 1.01B | 875.10M | 536.80M | 185.90M | Net Income Common Stockholders |
| 426.80M | 417.30M | 439.40M | 249.10M | 13.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 175.50M | 144.50M | 129.80M | 291.30M | 67.40M | Total Assets |
| 7.28B | 6.96B | 6.21B | 2.98B | 2.69B | Total Debt |
| 839.80M | 4.84B | 4.61B | 1.97B | 1.62B | Net Debt |
| 839.80M | 4.69B | 4.48B | 1.68B | 1.55B | Total Liabilities |
| 6.17B | 6.06B | 5.66B | 2.67B | 2.32B | Stockholders Equity |
| 1.08B | 893.60M | 551.50M | 306.80M | 367.10M |
| Cash Flow | Free Cash Flow | |||
| 225.70M | -70.70M | 80.00M | 243.70M | -92.30M | Operating Cash Flow |
| 772.70M | 605.80M | 536.80M | 335.50M | 141.90M | Investing Cash Flow |
| -545.20M | -718.00M | -3.10B | -100.40M | -239.40M | Financing Cash Flow |
| -196.60M | 129.30M | 2.42B | -500.00K | 76.00M |
Churchill Downs Technical Analysis
Negative
112.00
Price Trends
123.80
Negative
131.40
Negative
134.26
Negative
Market Momentum
-3.18
Positive
32.31
Neutral
27.14
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 112 is below the 20-day moving average (MA) of 117.83, below the 50-day MA of 123.80, and below the 200-day MA of 134.26, indicating a bearish trend. The MACD of -3.18 indicates Positive momentum. The RSI at 32.31 is Neutral, neither overbought nor oversold. The STOCH value of 27.14 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 28 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
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $32.97B | 23.47 | 41.30% | 1.85% | 8.93% | 22.50% | |
71 Outperform | $9.65B | 20.83 | -51.73% | 1.13% | 9.13% | -30.00% | |
65 Neutral | $9.03B | 13.40 | 21.76% | ― | 6.66% | -24.59% | |
60 Neutral | $8.42B | 20.16 | 42.87% | 0.36% | 11.07% | 3.32% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
44 Neutral | $2.95B | ― | -10.27% | ― | 3.38% | 38.18% |
* Consumer Cyclical Sector Average
Performance Comparison
CHDN
Churchill Downs
112.00
0.13
0.12%
LVS
Las Vegas Sands
45.06
-5.46
-10.81%
MGM
MGM Resorts
32.03
-10.44
-24.58%
PENN
Penn National Gaming
18.28
-0.03
-0.16%
WYNN
Wynn Resorts
88.72
-10.58
-10.65%
Churchill Downs Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -6.31% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
Churchill Downs Incorporated demonstrated strong financial performance with record revenue and significant growth in key areas like the Kentucky Derby and HRM venues. However, challenges remain with The Rose Gaming Resort's ramp-up and regional gaming headwinds. Despite these issues, the company's strategic expansions and strong free cash flow indicate a positive outlook.Highlights
Record Financial Performance
Churchill Downs Incorporated delivered all-time record net revenue and record adjusted EBITDA, up 11% and 13% respectively over 2023.
Kentucky Derby Success
The Kentucky Derby experienced significant growth with increased ticketing, sponsorships, and pari-mutuel wagering, contributing to record adjusted EBITDA.
Expansion Projects
Major expansion projects announced for Churchill Downs Racetrack, including the Sky Terrace renovation and the Conservatory, expected to enhance the Derby experience.
Growth in HRM Venues
HRM venues in Virginia contributed 20% of the company's nearly $1.2 billion adjusted EBITDA, with notable expansions planned in Richmond and Henrico County.
Free Cash Flow Increase
Generated $688 million or $9.22 per share of free cash flow in 2024, up nearly 33% per share over the prior year.
Lowlights
Challenges with The Rose Gaming Resort
The Rose Gaming Resort faced challenges due to delayed opening and market education, impacting initial performance.
Regional Gaming Headwinds
Existing regional gaming properties experienced consumer softness and increased competition, particularly in Maine, Maryland, and Pennsylvania.
Gray Market Gaming Issues
Ongoing challenges with gray market gaming in Kentucky and Virginia, impacting revenue despite enforcement efforts.
Company Guidance
During the Churchill Downs Incorporated 2024 fourth-quarter earnings call, CEO Bill Carstanjen announced record financial results, with net revenue and adjusted EBITDA up 11% and 13% respectively from 2023. The company achieved all-time highs across its business segments, with significant contributions from the Kentucky Derby and HRM operations in Virginia. The call highlighted key growth projects, including the Starting Gate Courtyard and Pavilion for the 2025 Kentucky Derby and a series of expansions at Churchill Downs Racetrack to be completed by 2028. Additionally, Carstanjen emphasized the strategic investments in HRM facilities in Virginia and Kentucky, which contributed 20% of the nearly $1.2 billion adjusted EBITDA. The company remains conservatively leveraged with a focus on disciplined capital management and is optimistic about future growth, with expectations for continued strong adjusted EBITDA and free cash flow.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.