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Churchill Downs (CHDN)
NASDAQ:CHDN
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Churchill Downs
(NASDAQ:CHDN)
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Rating:73Outperform
Price Target:
$124.00
▲(16.90% Upside)
Churchill Downs' strong earnings call performance and strategic growth initiatives are the most significant factors driving the score. The company's robust financial performance and positive technical indicators further support the stock's outlook. However, high leverage and competition challenges slightly temper the overall score.
Positive Factors
Revenue Growth
Record-breaking revenue growth indicates strong market demand and effective business strategies, supporting long-term financial health and expansion potential.
Expansion Initiatives
Strategic expansion projects enhance capacity and market presence, potentially increasing revenue streams and strengthening competitive positioning.
Cash Flow Improvement
Improved cash flow from tax changes enhances financial flexibility, allowing for strategic investments and shareholder returns, bolstering long-term stability.
Negative Factors
High Leverage
High leverage can pose financial risks, limiting the company's ability to invest in growth and increasing vulnerability to economic downturns.
Cost Pressures
Cost pressures affecting margins could impact profitability, necessitating efficiency improvements to maintain competitive advantage.
Increased Competition
Rising competition may pressure market share and profitability, requiring strategic responses to maintain leadership in key markets.
Churchill Downs (CHDN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.40B
Dividend Yield0.38%
Average Volume (3M)658.96K
Price to Earnings (P/E)19.2
Beta (1Y)0.65
Revenue Growth7.97%
EPS Growth-0.14%
CountryUS
Employees6,480
SectorConsumer Cyclical
Sector Strength84
IndustryGambling, Resorts & Casinos
Share Statistics
EPS (TTM)1.09
Shares Outstanding69,728,745
10 Day Avg. Volume584,772
30 Day Avg. Volume658,956
Financial Highlights & Ratios
PEG Ratio7.14
Price to Book (P/B)9.12
Price to Sales (P/S)3.61
P/FCF Ratio43.78
Enterprise Value/Market Cap1.59
Enterprise Value/Revenue4.08
Enterprise Value/Gross Profit12.20
Enterprise Value/Ebitda11.73
Forecast
1Y Price Target
$125.46Price Target Upside18.28% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 Earnings Call Summary
Earnings Call Date:Oct 22, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 25, 2026
Earnings Call Sentiment Positive
The earnings call highlighted Churchill Downs' record-breaking financial performance and strategic investments to enhance growth. While there are challenges such as increased competition and illegal gaming machines, the company is making significant progress in expanding its footprint and improving shareholder returns.Q3-2025 Updates
Positive Updates
Record-Breaking Revenue and Growth
Churchill Downs Incorporated reported record net revenue and record adjusted EBITDA for the third quarter of 2025. The Live and Historical Racing segment also experienced record growth, with revenue increasing by 21% and adjusted EBITDA by 25% compared to the previous year.
Strong Performance of HRM Properties
The company's HRM properties in Kentucky and Virginia showed strong growth. The Rose in Virginia reported increasing gross gaming revenues, and the new Henrico County venue had a strong start. Kentucky HRM properties also increased margins by over 3 points compared to the previous year.
Expansion and Investment Initiatives
Churchill Downs announced plans for the $280-$300 million Victory Run project, which will enhance the track's capacity and improve the guest experience. Additionally, the company is expanding its footprint with new venues in New Hampshire and continued investment in Exacta technology.
Increased Dividend and Share Repurchases
The Board approved a 7% increase in dividends for the 15th consecutive year. The company also repurchased over $50 million of its stock in the third quarter, demonstrating strong capital management.
Positive Tax Legislation Impact
The new federal tax provisions will result in an estimated $50-$60 million reduction in cash taxes for 2025 and 2026 due to favorable changes in business tax rates and bonus depreciation rules.
Negative Updates
Impact of Increased Competition
Increased competition affected properties in Southern and Western Virginia, impacting their performance compared to the previous year.
Challenges with Illegal Gaming Machines
Enforcement and regulation of illegal gaming machines continue to be a challenge, though they are not currently seen as a major concern for the company's growth.
Company Guidance
In the third quarter 2025 earnings call, Churchill Downs Incorporated reported record net revenue and adjusted EBITDA, driven by strong performances in both their Live and Historical Racing and Wagering Services & Solutions segments. CEO Bill Carstanjen outlined growth strategies including enhancements for Derby Week, such as the Starting Gate Pavilion and the upcoming Victory Run project, expected to provide substantial adjusted EBITDA growth through premium ticket experiences and increased broadcast revenue. The company also plans to expand its HRM operations with new venues in Kentucky and Virginia, and a significant investment in a new gaming facility in Salem, New Hampshire. CFO Marcia Dall highlighted a 21% revenue growth in the Live and Historical Racing segment, a 13% increase in free cash flow per share, and the impact of federal tax changes, which are expected to improve cash flow by $50-60 million in both 2025 and 2026. The company's strategic capital allocation includes projected project capital expenditures of $160-$200 million for 2026 and a 7% increase in dividends, reflecting a commitment to long-term shareholder value.Churchill Downs Financial Statement Overview
Summary
Churchill Downs shows strong revenue growth and profitability with stable margins and efficient equity utilization. However, high leverage poses a potential risk, and there are signs of cost pressures affecting margins. The company demonstrates strong cash flow generation, although there are some constraints in free cash flow relative to net income.Income Statement
Churchill Downs has demonstrated consistent revenue growth, with a TTM revenue growth rate of 1.93% and strong historical growth. The gross profit margin is stable at around 33-34%, and the net profit margin is healthy at approximately 14%. However, there is a slight decline in EBIT and EBITDA margins compared to previous years, indicating potential cost pressures.Balance Sheet
The company has a high debt-to-equity ratio of 4.93, indicating significant leverage, which could pose financial risks. However, the return on equity is strong at 38.11%, suggesting efficient use of equity. The equity ratio is relatively low, reflecting the high leverage.Cash Flow
Churchill Downs shows a robust free cash flow growth rate of 49.67% TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is above 1, reflecting good cash conversion. However, the free cash flow to net income ratio is slightly below 1, suggesting some cash flow constraints.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.88B | 2.73B | 2.46B | 1.81B | 1.60B | 1.05B |
| Gross Profit | 965.60M | 938.50M | 795.70M | 566.40M | 446.10M | 193.50M |
| EBITDA | 1.00B | 1.07B | 1.01B | 875.10M | 536.80M | 185.90M |
| Net Income | 403.20M | 426.80M | 417.30M | 439.40M | 249.10M | -81.90M |
Balance Sheet | ||||||
| Total Assets | 7.45B | 7.28B | 6.96B | 6.21B | 2.98B | 2.69B |
| Cash, Cash Equivalents and Short-Term Investments | 180.50M | 175.50M | 144.50M | 129.80M | 291.30M | 67.40M |
| Total Debt | 5.11B | 4.92B | 4.84B | 4.61B | 1.97B | 1.62B |
| Total Liabilities | 6.38B | 6.17B | 6.06B | 5.66B | 2.67B | 2.32B |
| Stockholders Equity | 1.03B | 1.08B | 893.60M | 551.50M | 306.80M | 367.10M |
Cash Flow | ||||||
| Free Cash Flow | 590.30M | 225.70M | -70.70M | 80.00M | 243.70M | -92.30M |
| Operating Cash Flow | 804.40M | 772.70M | 605.80M | 536.80M | 335.50M | 141.90M |
| Investing Cash Flow | -550.80M | -545.20M | -718.00M | -3.10B | -100.40M | -239.40M |
| Financing Cash Flow | -216.50M | -196.60M | 129.30M | 2.42B | -500.00K | 76.00M |
Churchill Downs Technical Analysis
Neutral
106.07
Price Trends
108.39
Negative
102.70
Positive
101.66
Positive
Market Momentum
-0.15
Positive
36.09
Neutral
22.19
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHDN, the sentiment is Neutral. The current price of 106.07 is below the 20-day moving average (MA) of 113.74, below the 50-day MA of 108.39, and above the 200-day MA of 101.66, indicating a neutral trend. The MACD of -0.15 indicates Positive momentum. The RSI at 36.09 is Neutral, neither overbought nor oversold. The STOCH value of 22.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 | $6.86B | 3.85 | 87.17% | 0.84% | 5.91% | 336.91% | |
73 Outperform | $7.40B | 19.22 | 37.56% | 0.38% | 7.97% | -0.14% | |
71 Outperform | $6.55B | 22.09 | 96.16% | 3.22% | 4.69% | 15.18% | |
63 Neutral | $9.52B | 217.51 | 2.25% | ― | 0.05% | -94.07% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
53 Neutral | $12.25B | 25.99 | ― | 0.80% | -0.26% | -44.45% | |
51 Neutral | $5.01B | -21.64 | -6.06% | ― | 0.87% | 31.28% |
* Consumer Cyclical Sector Average
CHDN
Churchill Downs
105.48
-22.97
-17.88%
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RRR
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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.