Churchill Downs (NASDAQ:CHDN) Stock Price Down 9.4% - Here's Why

Key Points

• Churchill Downs shares fell about 9.4% to roughly $80.18 on trading volume 46% above average, as investors reacted to the company’s quarterly results and earnings outlook.
• Second-quarter revenue increased 4.9% year over year to $980 million and EPS rose to $3.45, but earnings came in below the more conservative Zacks estimate of $3.51 per share, likely contributing to the selloff.
• The company agreed to acquire NYRA’s 49% stake in United Tote and is reviewing strategic options for its gaming assets, including a potential sale. Analysts remain broadly positive, with a “Moderate Buy” consensus and an average price target of $138.50.

Churchill Downs, Incorporated (NASDAQ:CHDN - Get Free Report) shares were down 9.4% on Thursday . The company traded as low as $80.64 and last traded at $80.1770. 1,397,085 shares changed hands during trading, an increase of 46% from the average session volume of 959,434 shares. The stock had previously closed at $88.53.

Churchill Downs News Roundup

Here are the key news stories impacting Churchill Downs this week:

• Positive Sentiment: Churchill Downs agreed to acquire NYRA’s 49% stake in United Tote, which would give it full ownership of the pari-mutuel wagering technology and services business. The transaction could provide greater operating control and potential long-term synergies. United Tote acquisition announcement
• Positive Sentiment: Management is reviewing strategic alternatives for its gaming assets, including a potential sale. A divestiture could unlock value, reduce leverage and allow Churchill Downs to focus on higher-priority businesses, although no transaction has been announced. Strategic review of gaming assets
• Positive Sentiment: Second-quarter revenue rose 4.9% year over year to $980 million, slightly exceeding the approximately $977.4 million analyst estimate, while earnings increased from $3.10 to $3.45 per share. Second-quarter results
• Neutral Sentiment: Churchill Downs announced continued investment in racetrack upgrades, including the Victory Run project, an expanded Homestretch Club and improved infield seating scheduled for completion in 2027 and 2028. The projects may support future revenue but require substantial capital spending. Churchill Downs capital projects
• Negative Sentiment: Results missed the more conservative Zacks consensus of $3.51 per share, despite meeting other consensus estimates. The earnings shortfall likely contributed to investor selling and overshadowed the year-over-year improvement. Q2 earnings estimate miss

Analyst Upgrades and Downgrades

A number of research firms have weighed in on CHDN. Weiss Ratings downgraded Churchill Downs from a "hold (c-)" rating to a "sell (d+)" rating in a report on Monday, May 4th. Truist Financial set a $145.00 target price on Churchill Downs in a research note on Friday, June 12th. Citizens Jmp lifted their price target on Churchill Downs from $146.00 to $149.00 and gave the company a "market outperform" rating in a research report on Friday, April 24th. Jefferies Financial Group reaffirmed a "buy" rating on shares of Churchill Downs in a research note on Thursday, July 2nd. Finally, Wells Fargo & Company decreased their price objective on Churchill Downs from $132.00 to $120.00 and set an "overweight" rating for the company in a report on Tuesday, July 14th. Nine equities research analysts have rated the stock with a Buy rating and one has given a Sell rating to the stock. According to data from MarketBeat, Churchill Downs presently has an average rating of "Moderate Buy" and a consensus target price of $138.50.

Churchill Downs Trading Down 9.3%

The stock has a 50-day moving average of $86.88 and a two-hundred day moving average of $90.64. The company has a market cap of $5.60 billion, a P/E ratio of 14.85, a price-to-earnings-growth ratio of 0.58 and a beta of 0.67. The company has a debt-to-equity ratio of 4.44, a quick ratio of 0.54 and a current ratio of 0.54.

Churchill Downs (NASDAQ:CHDN - Get Free Report) last released its earnings results on Wednesday, July 29th. The company reported $3.45 EPS for the quarter, hitting the consensus estimate of $3.45. Churchill Downs had a return on equity of 43.50% and a net margin of 13.21%.The business had revenue of $980.00 million for the quarter, compared to the consensus estimate of $977.38 million. During the same period in the previous year, the company posted $3.10 earnings per share. The company's revenue for the quarter was up 4.9% compared to the same quarter last year. On average, equities research analysts predict that Churchill Downs, Incorporated will post 7.14 earnings per share for the current year.

Hedge Funds Weigh In On Churchill Downs

A number of hedge funds have recently bought and sold shares of the company. Sapient Capital LLC increased its stake in Churchill Downs by 596.9% during the 2nd quarter. Sapient Capital LLC now owns 418,966 shares of the company's stock valued at $37,556,000 after purchasing an additional 358,845 shares in the last quarter. Assenagon Asset Management S.A. purchased a new stake in shares of Churchill Downs during the second quarter valued at approximately $5,212,000. GAMMA Investing LLC increased its position in shares of Churchill Downs by 49.2% during the second quarter. GAMMA Investing LLC now owns 1,156 shares of the company's stock valued at $104,000 after acquiring an additional 381 shares in the last quarter. NewEdge Advisors LLC purchased a new position in Churchill Downs in the 1st quarter worth approximately $50,000. Finally, Essential Partners LLC raised its holdings in Churchill Downs by 64.7% in the 1st quarter. Essential Partners LLC now owns 578 shares of the company's stock worth $52,000 after acquiring an additional 227 shares during the last quarter. Institutional investors own 82.59% of the company's stock.

About Churchill Downs

Churchill Downs Incorporated is a leading American entertainment and gaming company best known for operating the Churchill Downs racetrack in Louisville, Kentucky, home of the annual Kentucky Derby. Beyond its signature thoroughbred racing venue, the company manages a diversified portfolio of live racing facilities, casinos, and off-track betting operations. Its services encompass pari-mutuel wagering, historical horse racing machines, and online betting through its TwinSpires platform, reaching horse racing and sports betting enthusiasts nationwide.

In its live racing segment, Churchill Downs oversees a network of racetracks and racing festivals, offering year-round events in multiple states.

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