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what it is
Churchill Downs runs horse tracks, casinos, and online betting, then collects the house edge across all three.
how it gets paid
Last year Churchill Downs made $2.9B in revenue. casino gaming was the main engine at $1.42B, or 49% of sales.
why it's growing
Revenue grew 7.0% last year. Second, the company will benefit from a more mature operation of its resort casino property, the rose, located just outside of washington d.c., which opened.
what just happened
$0.97 in EPS, below the $1.00 estimate, while revenue hit $2.3B.
At a glance
B+ balance sheet — decent shape, but not bulletproof
30/100 earnings predictability — expect surprises
17.2x trailing p/e — the market's not buying it — or you found a deal
0.5% dividend yield — cash in your pocket every quarter
11.0% return on capital — nothing to write home about
xvary composite: 64/100 — average
What they do
Churchill Downs runs horse tracks, casinos, and online betting, then collects the house edge across all three.
You can copy a sportsbook app. You cannot copy Churchill Downs Racetrack, state licenses, and a gambling network built across racing, casinos, and TwinSpires. That mix helped produce a 23.4% operating margin (operating margin → profit after running the business → so what, this is not a weak venue operator).
How they make money
$2.9B
annual revenue · their business grew +7.0% last year
casino gaming
$1.42B
live and historical racing
$0.67B
online wagering
$0.46B
sports betting
$0.23B
lodging and other
$0.12B
The products that matter
owns and runs casinos
Gaming Properties
$1.6B · 55% of revenue
This $1.6B segment is the center of gravity. It grew 8.0% last year and underwrites the rest of the story.
55% of revenue
online horse wagering
TwinSpires
$0.7B · +12.0% growth
This $0.7B business grew faster than the company at 12.0%. That's why digital matters even if the brand starts at the track.
growth engine
live racing and event brand
Kentucky Derby / Live Racing
$0.5B segment · 150-year brand
Live and historical racing produced $0.5B of revenue. The Derby is the brand halo that keeps the whole portfolio from looking generic.
brand moat
Key numbers
17.2x
trailing p/e
P/E → price divided by past earnings → so what, you are paying 17.2 times trailing profit for a business with 23.4% operating margins and average risk.
$5.0B
long-term debt
Debt → money the company owes → so what, $5.0B is large against a roughly $7B market cap and leaves less room for mistakes.
23.4%
operating margin
Operating margin → profit after day-to-day costs → so what, this business keeps almost $0.23 of every revenue dollar before interest and taxes.
11.0%
return on capital
Return on capital → profit earned on money invested in the business → so what, 11.0% is solid, but not so high that you can ignore the debt.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 60 / 100
- long-term debt $5.0B (41% of capital)
- net profit margin 17.5% — keeps 18 cents of every dollar in revenue
- return on equity 21% — $0.21 profit for every $1 investors have put in
B+ — net profit margin looks solid but long-term debt needs watching.
Total return vs. market
You invested $10,000 in CHDN 3 years ago → it's now worth $9,600.
The index would have given you $14,770.
source: institutional data · total return
What just happened
missed estimates
$0.97 in EPS, below the $1.00 estimate, while revenue hit $2.3B.
That was a 3.0% EPS miss. The weird part is revenue surged 231% vs. prior year to $2.3B, so the issue was not traffic, it was conversion of revenue into profit.
$720M
revenue
$0.97
eps
23.4%
operating margin
the number that mattered
$0.97 mattered because the company missed the $1.00 estimate, and this stock already carries a 1.15 beta, which makes misses louder.
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after what was likely a record year of earnings in 2025, we think churchill downs should have solid results in the year ahead.
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several actions taken in the past year set the company up for continued growth.first, the namesake kentucky derby should benefit from expanded coverage of the week leading up to the race. the friday night before the derby, the running of the kentucky oaks will be aired on prime time television. while most focus on the iconic annual race, management has been successfully broadening coverage to the entire week.
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online sports betting could produce additional revenue as awareness increases.second, the company will benefit from a more mature operation of its resort casino property, the rose, located just outside of washington d.c., which opened in late-2024.
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plans have been revealed for the recently acquired salem, new hampshire gaming property.management is trying to replicate the success of its washington d.c. casino around the outskirts of boston. currently, the temporary venue has 13 table games and 100 historical racing machines (hrms), which are essentially equivalent to slot machines.
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after construction of a permanent facility, there will be 30 table games and 900 hrms.
source: company earnings report, 2025
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What could go wrong
The biggest risk here is state action against historical racing machines. Churchill Downs can post casino margins, but it still operates where rules can change faster than buildings do.
med
historical racing regulation
Historical racing machines face legal and political scrutiny in multiple states. If regulators decide these machines look too much like slots, the revenue math changes fast.
Management's own business mix tells you why this matters: Gaming & Casinos is a $1.6B segment, and a ban in key states could threaten more than $1B of annual gaming revenue.
med
leverage
Long-term debt sits at $5.0B, or 41% of capital. That doesn't break the story today, but it leaves less room for operating mistakes and higher financing costs.
When leverage is this visible, you need operating momentum to stay visible too. A slower growth profile makes the balance sheet feel heavier.
med
consumer spending pressure
Gaming and wagering are discretionary. If the customer pulls back, Churchill Downs feels it in casino traffic, betting activity, and everything attached to that spend.
A 10% drop in gaming revenue would remove about $160M from the top line. On a $2.9B revenue base, that is enough to change the mood around the stock.
This is a profitable operator, but the risk stack is real: regulatory exposure sits on top of $5.0B in debt and a business tied to discretionary spend.
source: institutional data · regulatory filings · risk analysis
Pay attention to
key metric
can revenue growth stay above 7.0%
Last year's revenue growth was +7.0% on a $2.9B base. If that slows while leverage stays high, the "cheap for the quality" argument gets thinner.
risk
historical racing rules
The company can tolerate noise. It cannot ignore adverse state rulings on historical racing machines. That is the one risk that can rewrite the margin story.
calendar
next quarter after the $0.7B print
You want to see whether the latest quarter's 9% growth and $1.07 EPS were the start of a trend or just a clean quarter.
flow
institutional selling streak
Institutions were net sellers for two straight quarters. If that continues while fundamentals only stay average, the stock can remain stuck even with solid margins.
Analyst rankings
short-term outlook
top 20%
outlook rank 2 — in human-speak, analysts expect CHDN to outperform most stocks over the next year.
risk profile
average
risk rank 3 — not a bunker stock, not a disaster. The business is profitable, but regulation and leverage keep it from feeling safer than average.
chart momentum
average
momentum rank 3 — the chart is not giving you a strong signal either way. The story has to do the work.
earnings predictability
30 / 100
30 / 100 predictability means quarterly results can swing. If you own it, expect a noisier path than the brand might suggest.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 184 buyers vs. 225 sellers in 3q2025. total institutional holdings: 53.8M shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$91
$188
$106
current price
$140
target midpoint · +32% from current · 3-5yr high: $280 (+165% · 28% ann'l return)
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