Churchill Downs Inc (NASDAQ: CHDN)

Sector: Consumer Cyclical Industry: Gambling CIK: 0000020212
Market Cap 6.54 Bn
P/B 5.96
P/E 15.85
P/S 2.45
ROIC (Qtr) 7.15
Div Yield % 0.93
Rev 1y % (Qtr) 8.67
Total Debt (Qtr) 5.11 Bn
Debt/Equity (Qtr) 4.93
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About

Churchill Downs Incorporated (CDI), commonly recognized by its ticker symbol CHDN, operates in the entertainment and gaming industry. The company, based in Louisville, Kentucky, conducts its business activities through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming. CDI's main business activities revolve around creating extraordinary entertainment experiences, primarily in the realm of live and historical racing, online horse racing wagering, and casino gaming. These activities are carried out in various countries...

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Investment thesis

Bull case

  • Healthy cash reserves of 268.50M provide 4.26x coverage of short-term debt 63.10M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 804.40M provides exceptional 277.38x coverage of minority interest expenses 2.90M, showing strong core operations.
  • Operating cash flow of 804.40M provides strong 25.86x coverage of stock compensation 31.10M, indicating sustainable incentive practices.
  • Strong operating cash flow of 804.40M provides 3.35x coverage of SG&A expenses 240.40M, showing efficient operational cost management.
  • Tangible assets of 4.04B provide exceptional 87.19x coverage of deferred revenue 46.30M, showing strong service capability backing.

Bear case

  • Operating cash flow of 804.40M barely covers its investment activities of (550.80M), with a coverage ratio of -1.46, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 804.40M provides thin coverage of dividend payments of (30.70M) with a -26.20 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 268.50M provide limited coverage of acquisition spending of (185.30M), which is -1.45x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 804.40M is outpaced by equity issuance of (423.10M) (-1.90 ratio), indicating concerning reliance on equity markets for funding operations.
  • Retained earnings of 1.04B provide limited buffer against comprehensive income items of (1M), which is -1035.90x, indicating elevated exposure to market risks.

Customer Breakdown of Revenue (2024)

Peer comparison

Companies in the Gambling
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 FLUT Flutter Entertainment plc 29.14 Bn -96.80 1.89 12.68 Bn
2 DKNG DraftKings Inc. 8.38 Bn 2,259.00 1.38 1.89 Bn
3 CHDN Churchill Downs Inc 6.54 Bn 15.85 2.45 5.11 Bn
4 SGHC Super Group (SGHC) Ltd 4.77 Bn 18.81 1.88 0.08 Bn
5 BRSL Brightstar Lottery PLC 2.79 Bn -19.68 0.50 5.13 Bn
6 RSI Rush Street Interactive, Inc. 1.54 Bn 51.33 1.45 0.00 Bn
7 ACEL Accel Entertainment, Inc. 0.92 Bn 21.02 0.70 0.60 Bn
8 CDRO Codere Online Luxembourg, S.A. 0.30 Bn 251.54 1.25 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.50 1.38
EV to Cash from Ops. EV/CFO 14.94 9.12
EV to Debt EV to Debt 2.19 10.53
EV to EBIT EV/EBIT 13.30 41.15
EV to EBITDA EV/EBITDA 12.60 12.35
EV to Free Cash Flow [EV/FCF] EV/FCF 73.68 20.81
EV to Market Cap EV to Market Cap 1.71 -0.89
EV to Revenue EV/Rev 4.18 1.79
Price to Book Value [P/B] P/B 5.96 2.35
Price to Earnings [P/E] P/E 15.85 170.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 13.14 0.72
Dividend Payout Ratio % Div Payout % (Qtr) 7.40 20.21
Dividend per Basic Share Div per Share (Qtr) 0.41 0.30
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 6.38 45.34
Interest Coverage Int. cover (Qtr) 2.82 -4.66
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 40.60 -6.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 16.03 43.20
Dividend Growth (1y) % Div 1y % (Qtr) 7.07 34.14
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -0.43 339.71
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 3.78 59.74
EBIT Growth (1y) % EBIT 1y % (Qtr) -0.94 40.42
EBT Growth (1y) % EBT 1y % (Qtr) -2.75 9.08
EPS Growth (1y) % EPS 1y % (Qtr) 0.18 463.23
FCF Growth (1y) % FCF 1y % (Qtr) 197.10 -118.03
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.98 16.12
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.39 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.03 0.08
Cash Ratio Cash Ratio (Qtr) 0.37 0.74
Current Ratio Curr Ratio (Qtr) 0.57 1.04
Debt to Equity Ratio Debt/Equity (Qtr) 4.93 -2.16
Interest Cover Ratio Int Coverage (Qtr) 2.82 -4.66
Times Interest Earned Times Interest Earned (Qtr) 2.82 -4.66
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 36.90 -104.37
EBIT Margin % EBIT Margin % (Qtr) 28.85 -142.35
EBT Margin % EBT Margin % (Qtr) 18.63 -146.31
Gross Margin % Gross Margin % (Qtr) 33.50 44.07
Net Profit Margin % Net Margin % (Qtr) 14.00 -145.36