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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 reduced institutional ownership, with Assenagon Asset Management S.A. trimming its holdings by 21.1%, Cynosure Group LLC by 84.4%, and Voya Investment Management LLC by 73.6%. Despite beating Q4 earnings estimates with $0.97 per share, concerns around growth prospects and capital expenditures persist. The company's diversified revenue streams, including racing, gaming, and digital, are expected to drive growth, but rising costs and competition may impact profitability. Brokerages still recommend a "Buy" rating, citing growth potential.

1.c. Company Highlights

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

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Churchill Downs Incorporated (CHDN) Q4 2025 Earnings Call Transcript

Feb -26

Source: seekingalpha.com

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

Feb -26

Source: zacks.com

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Churchill Downs (CHDN) Q4 Earnings and Revenues Beat Estimates

Feb -26

Source: zacks.com

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Churchill Downs Incorporated Reports 2025 Fourth Quarter and Full Year Results

Feb -25

Source: globenewswire.com

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Churchill Downs Incorporated Opens Marshall Yards Racing & Gaming in Southwestern Kentucky

Feb -24

Source: globenewswire.com

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Beck Bode Initiates Churchill Downs Position as Regional Gaming Expansion Lifts Growth Prospects

Feb -21

Source: fool.com

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The London Company Mid Cap Portfolio Q4 2025: Who Moved The Needle

Feb -16

Source: seekingalpha.com

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Churchill Downs Incorporated Announces Exciting Changes to Kentucky Derby Week Racing

Feb -10

Source: globenewswire.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

Strength

Weaknesses

Opportunities

Threats

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

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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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

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Growth: 5.9

Quality: 6.4

Yield: 8.0

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Wynn Resorts

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Growth: 6.1

Quality: 4.7

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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

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Quality: 4.0

Yield: 6.0

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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

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

90.75$

Current Price

90.75$

Potential

-0.00%

Expected Cash-Flows