Churchill Downs Incorporated (CHDN) | Investment Case

1. Company Snapshot

1.a. Company Description

Churchill 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.

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1.b. Last Insights on CHDN

Churchill Downs Incorporated faced negative drivers, including decreased institutional ownership. Assenagon Asset Management S.A. and Cynosure Group LLC trimmed their holdings by 21.1% and 84.4%, respectively. Voya Investment Management LLC also lowered its stake by 73.6%. Despite beating Q4 earnings estimates with $0.97 per share, concerns may arise from decreased investor confidence. Additionally, the company's Q4 2025 earnings call transcript and head-to-head review with DraftKings may have influenced investor sentiment. (Source: Zacks, Bloomberg)

1.c. Company Highlights

Last Price	85.37
Change Percentage	-2.52%
Open	87.18
Previous Close	87.57
Market Cap ( Millions)	5950
Volume	349246.61
Year High	118.46
Year Low	80.24
M A 50	94.8
M A 200	100.96

FCF Yield	10.17%
Dividend Yield	0.51%
ROE	36.68%
Debt / Equity	514.71%
Net Debt / EBIDTA	458.91%
Price To Book	6.04
Price Earnings Ratio	15.99
Price To FCF	9.83
Price To sales	2.03
EV / EBITDA	10.15

2. Churchill Downs Incorporated Delivers Record 2025 with Strong Revenue and EBITDA Growth

Churchill Downs Incorporated reported a record 2025 with net revenue and adjusted EBITDA exceeding the prior record set in 2024. The company's actual EPS came out at $0.97, beating estimates of $0.85. The strong financial performance was driven by the live and historical racing segment and Wagering Services and Solutions segment, which both delivered record adjusted EBITDA. The company's revenue growth was accompanied by a significant increase in free cash flow, which reached a record $700 million in 2025.

Publication Date: Mar -01

                                    📋 Highlights
                                    Record 2025 Financials::
                                                Net revenue and adjusted EBITDA exceeded 2024 records, with free cash flow hitting $700 million, returning $456 million via share repurchases and dividends.
Kentucky Derby Success::
                                                Generated record handle and TV ratings, with 2026 expected to add $15–$20 million incremental adjusted EBITDA from growth initiatives.
HRM and ETG Expansion::
                                                Historical racing machine (HRM) and electronic table games (ETGs) drove record adjusted EBITDA, with $180–$200 million planned for Rockingham Casino investment.
Strategic Capital Allocation::
                                                2026 capex of $90–$110 million (maintenance) and $180–$220 million (projects), aiming to lower net leverage to below 4x by year-end.
Exacta Growth and AI Investment::
                                                Exacta technology business expansion and AI adoption to enhance customer experience, supporting international Derby Road to the Derby initiatives in the Middle East.

                                

Segment Performance

The company's HRM properties in Kentucky and Virginia delivered record adjusted EBITDA, driven by the continued evolution of the product and market expansion. The Wagering Services and Solutions segment adjusted EBITDA increased 7% in 2025, driven by the growth of the Exacta technology business. The company's success with Exacta is expected to continue, with plans to expand into new markets.

Growth Prospects

The company is optimistic about its growth prospects, driven by the Kentucky Derby, expansion of HRM venues, and growth of the Exacta technology business. The company expects the Derby to generate $15 million to $20 million of incremental adjusted EBITDA in 2026. The introduction of electronic table games (ETGs) is also expected to enhance the offering and drive growth.

Valuation

Using the current valuation metrics, the company's P/E Ratio is 17.21, and the EV/EBITDA is 6.74. The company's ROE is 51.78%, indicating strong profitability. The Free Cash Flow Yield is 9.44%, suggesting that the company is generating significant cash flow. Analysts estimate next year's revenue growth at 3.4%, which is a moderate growth rate. The company's strong financial performance and growth prospects are expected to drive shareholder value.

Capital Allocation

The company generated strong free cash flow in 2025 and returned over $456 million to shareholders through share repurchases and dividends. The management team considers various factors, including the share price, when evaluating capital allocation and new projects. The company may consider a more formulaic approach to share repurchase going forward, indicating a commitment to returning value to shareholders.

3. NewsRoom

Churchill Downs Incorporated 2026 First Quarter Financial Results Conference Call Invitation

Mar -16

Source: globenewswire.com

Churchill Downs: A 150-Year-Old Cash Machine Trading At A Discount

Mar -16

Source: seekingalpha.com

Touchstone Mid Cap Fund Q4 2025 Portfolio Review

Mar -15

Source: seekingalpha.com

Fieldview Capital Management LLC Invests $3.87 Million in Churchill Downs, Incorporated $CHDN

Mar -09

Source: defenseworld.net

Blair William & Co. IL Has $17.83 Million Stock Position in Churchill Downs, Incorporated $CHDN

Mar -09

Source: defenseworld.net

Churchill Downs (NASDAQ:CHDN) vs. DraftKings (NASDAQ:DKNG) Head to Head Review

Mar -05

Source: defenseworld.net

Churchill Downs Incorporated (CHDN) Q4 2025 Earnings Call Transcript

Feb -26

Source: seekingalpha.com

Churchill Downs (CHDN) Reports Q4 Earnings: What Key Metrics Have to Say

Feb -26

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.61%)

6. Segments

Live and Historical Racing

Expected Growth: 8%

Churchill Downs Incorporated's Live and Historical Racing segment growth is driven by increasing popularity of horse racing, strategic acquisitions, and expansion of online wagering platforms. Additionally, the company's focus on improving customer experience, enhancing racing products, and investing in technology infrastructure have contributed to the 8% growth.

Gaming

Expected Growth: 10%

Churchill Downs Incorporated's 10% growth in Gaming is driven by increasing popularity of online gaming, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on improving customer experience, investing in digital infrastructure, and leveraging data analytics to enhance marketing efforts have contributed to the growth.

Twin Spires

Expected Growth: 7%

Twin Spires' 7% growth is driven by increasing online wagering, strategic marketing efforts, and expansion into new jurisdictions. Additionally, the rise of mobile betting, improved user experience, and growing popularity of horse racing contribute to the segment's growth.

All Other

Expected Growth: 6%

Churchill Downs Incorporated's 'All Other' segment growth is driven by increasing demand for its online wagering platform, TwinSpires, and its casino gaming operations. The company's strategic acquisitions, such as the purchase of Presque Isle Downs & Casino, have also contributed to growth. Additionally, the expansion of sports betting and iGaming in the US has created new opportunities for the company.

7. Detailed Products

Racing

Churchill Downs Incorporated operates horse racing tracks, including the iconic Churchill Downs Racetrack, home of the Kentucky Derby.

Gaming

The company operates casinos and gaming facilities, offering a range of games, including slots, table games, and poker.

Online Wagering

Churchill Downs Incorporated offers online wagering platforms, allowing customers to bet on horse racing and sports from the comfort of their own homes.

Sports Betting

The company offers sports betting services, allowing customers to place bets on various sports and events.

Casino Operations

Churchill Downs Incorporated operates casinos, offering a range of gaming options, dining, and entertainment.

Racing and Sports Technology

The company provides technology solutions for the horse racing and sports industries, including tote systems and sports betting platforms.

8. Churchill Downs Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Churchill Downs Incorporated has a low threat of substitutes due to the unique experience offered by its horse racing and gaming operations.

Bargaining Power Of Customers

Churchill Downs Incorporated has a medium bargaining power of customers due to the presence of multiple competitors in the gaming and entertainment industry.

Bargaining Power Of Suppliers

Churchill Downs Incorporated has a low bargaining power of suppliers due to its strong relationships with vendors and suppliers in the industry.

Threat Of New Entrants

Churchill Downs Incorporated has a high threat of new entrants due to the growing popularity of online gaming and sports betting, which may attract new competitors.

Intensity Of Rivalry

Churchill Downs Incorporated operates in a highly competitive industry with intense rivalry among existing players, which may impact its market share and revenue.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	84.40%
Debt Cost	7.47%
Equity Weight	15.60%
Equity Cost	8.88%
WACC	7.69%
Leverage	541.22%

11. Quality Control: Churchill Downs Incorporated passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Boyd Gaming

A-Score: 6.0/10

Value: 6.5

Growth: 7.2

Quality: 6.5

Yield: 1.0

Momentum: 7.0

Volatility: 8.0

1-Year Total Return ->

Vail Resorts

A-Score: 5.6/10

Value: 4.0

Growth: 5.9

Quality: 6.4

Yield: 8.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

Wynn Resorts

A-Score: 5.2/10

Value: 5.6

Growth: 6.1

Quality: 4.7

Yield: 1.0

Momentum: 8.0

Volatility: 5.7

1-Year Total Return ->

Churchill Downs

A-Score: 4.7/10

Value: 4.3

Growth: 8.9

Quality: 5.5

Yield: 0.0

Momentum: 1.5

Volatility: 7.7

1-Year Total Return ->

Marriott Vacations Worldwide

A-Score: 4.6/10

Value: 7.4

Growth: 5.7

Quality: 4.0

Yield: 6.0

Momentum: 1.0

Volatility: 3.3

1-Year Total Return ->

MGM Resorts

A-Score: 4.0/10

Value: 4.2

Growth: 7.6

Quality: 2.6

Yield: 0.0

Momentum: 4.0

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-0.23%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.69%

Churchill Downs Incorporated - US1714841087

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CHDN

1.c. Company Highlights

Higher Growth

Expensive

Less Volatile

Earnings Beats

Revenues Miss

Revenues Beats

Earnings Miss

Fairly Valued

Stable Momentum

Weak Momentum

2. Churchill Downs Incorporated Delivers Record 2025 with Strong Revenue and EBITDA Growth

Segment Performance

Growth Prospects

Valuation

Capital Allocation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.61%)

6. Segments

Live and Historical Racing

Expected Growth: 8%

Gaming

Expected Growth: 10%

Twin Spires

Expected Growth: 7%

All Other

Expected Growth: 6%

7. Detailed Products

Racing

Gaming

Online Wagering

Sports Betting

Casino Operations

Racing and Sports Technology

8. Churchill Downs Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Churchill Downs Incorporated passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

85.37$

Current Price

85.37$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA