Valuation method | Value, $ | Upside, % |
---|---|---|
Artificial intelligence (AI) | 78.84 | -18 |
Intrinsic value (DCF) | 146.29 | 52 |
Graham-Dodd Method | 25.40 | -74 |
Graham Formula | 107.58 | 12 |
Churchill Downs Incorporated (NASDAQ: CHDN) is a premier racing, online wagering, and gaming entertainment company in the U.S., best known for hosting the iconic Kentucky Derby. The company operates through three key segments: Live and Historical Racing, TwinSpires (its online wagering platform), and Gaming. With a diversified portfolio, CHDN owns and operates pari-mutuel gaming venues, retail sportsbooks, and casino gaming facilities across eight states, featuring over 11,000 slot machines and 200 table games. Its TwinSpires platform is a leading online destination for horse racing, sports betting, and iGaming, complemented by streaming services and handicapping tools. Founded in 1875 and headquartered in Louisville, Kentucky, Churchill Downs has cemented its position in the consumer cyclical sector by blending tradition with modern gaming innovations. The company’s strategic expansion into digital wagering and historical racing machines (HRMs) positions it for sustained growth in the competitive gambling and resorts industry.
Churchill Downs presents a compelling investment case due to its diversified revenue streams, strong brand equity (anchored by the Kentucky Derby), and expansion in high-margin digital and gaming segments. The company’s robust operating cash flow ($772.7M in the latest period) supports its growth initiatives, including HRMs and online wagering. However, risks include high leverage (total debt of $4.92B) and regulatory uncertainties in the gaming sector. With a market cap of $6.73B and a beta of 1.016, CHDN offers moderate volatility exposure to the cyclical gambling industry. Investors should monitor its ability to integrate acquisitions and navigate state-level gaming regulations.
Churchill Downs holds a unique competitive advantage through its vertically integrated model, combining iconic live racing events (e.g., Kentucky Derby) with a scalable online platform (TwinSpires) and regional gaming assets. Its historical racing machines (HRMs) provide a differentiated product in limited-competition markets like Kentucky. TwinSpires benefits from cross-selling opportunities with its casino and sportsbook operations, creating a sticky ecosystem for bettors. However, the company faces intense competition from larger casino operators (e.g., Caesars, MGM) in regional gaming and from pure-play online betting platforms (e.g., DraftKings) in digital wagering. CHDN’s niche in horse racing insulates it somewhat from broader sports betting competition, but its smaller scale in iGaming relative to rivals could limit growth. Strategic investments in HRMs and targeted casino expansions (e.g., recent acquisitions in Virginia) strengthen its regional positioning, though reliance on regulatory approvals for HRMs introduces uncertainty.