Churchill Downs Inc. (CHDN, Financial) has announced plans to renovate key areas at the historic Churchill Downs Racetrack, with the goal of completing upgrades by April 2026. The planned enhancements will focus on the Finish Line Suites and The Mansion, both of which offer prime views of the iconic finish line.
However, Churchill Downs has made the decision to postpone its broader multi-year development efforts concerning The Skye, Conservatory, and Infield areas. This move comes amid fluctuating construction costs fueled by tariff and trade disputes, alongside broader macroeconomic challenges. The company indicated that it will continue to monitor the economic situation and may revisit its timeline and project sequencing accordingly.
The renovations for the Finish Line Suites will update 15 existing suites on the fifth floor, offering modernized amenities and expanding guest capacity to 750. Meanwhile, the Trophy Room, situated adjacent to these suites, will see improvements including new finishes and a feature bar, making it an attractive venue for over 300 guests.
In addition, updates to The Mansion, which was established in 2013 and sits on the sixth floor, will include enhanced finishes and other refinements. This exclusive area is renowned for its sweeping aerial views of the racetrack, offering guests a unique vantage point.
Churchill Downs plans to invest approximately $25 million to $30 million in these renovations, reflecting its commitment to enhancing the guest experience while navigating current economic challenges.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Churchill Downs Inc (CHDN, Financial) is $147.54 with a high estimate of $172.00 and a low estimate of $125.00. The average target implies an upside of 40.43% from the current price of $105.06. More detailed estimate data can be found on the Churchill Downs Inc (CHDN) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Churchill Downs Inc's (CHDN, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Churchill Downs Inc (CHDN, Financial) in one year is $173.39, suggesting a upside of 65.04% from the current price of $105.06. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Churchill Downs Inc (CHDN) Summary page.
Key Business Developments
Release Date: February 20, 2025
- Net Revenue: Record net revenue, up 11% over 2023.
- Adjusted EBITDA: Record adjusted EBITDA, up 13% over 2023.
- Virginia HRM Venues Contribution: 20% of nearly $1.2 billion adjusted EBITDA in 2024.
- Free Cash Flow: $688 million or $9.22 per share, up nearly 33% per share over the prior year.
- Maintenance Capital Expenditure: $84 million in 2024; expected $100 million to $110 million in 2025.
- Project Capital Expenditure: $463 million in 2024; expected $350 million to $400 million in 2025.
- Share Repurchases and Dividends: Over $218 million returned to shareholders in 2024.
- Bank Covenant Net Leverage: 4.0 times at the end of December 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Churchill Downs Inc (CHDN, Financial) achieved record net revenue and adjusted EBITDA in 2024, with an 11% and 13% increase respectively over 2023.
- The company successfully opened major projects like the Terre Haute casino resort and the Rose gaming resort, which are expected to drive growth in the coming years.
- The Kentucky Derby continues to be a significant asset, with ongoing investments in infrastructure and hospitality expected to enhance the guest experience and drive future revenue.
- CHDN's HRM venues in Virginia contributed significantly to the company's financial performance, accounting for 20% of the nearly $1.2 billion adjusted EBITDA in 2024.
- The company maintains a strong balance sheet, allowing for continued investment in growth opportunities while returning capital to shareholders through share repurchases and dividends.
Negative Points
- The introduction of new projects and expansions, such as the Starting Gate Courtyard and Pavilion, may pose risks of construction disruptions, although the company aims to minimize these impacts.
- The Rose gaming resort in Virginia is still in its early stages, requiring significant marketing investment to educate the market and attract customers.
- CHDN faces challenges from gray market gaming, which continues to impact revenue despite progress in enforcement in states like Kentucky and Virginia.
- The regional gaming market shows signs of maturity in certain areas, which may limit growth opportunities compared to other segments like HRMs and the Kentucky Derby.
- The company is exposed to potential economic headwinds, such as inflation and wage growth, which could impact consumer spending and operational costs.
