Core Viewpoint - Churchill Downs Incorporated (CDI) announced the Victory Run project, a significant growth initiative aimed at enhancing the hospitality and seating experience at the Churchill Downs Racetrack, set to replace outdated facilities with a modern structure [3][4][5]. Project Overview - Victory Run will be a four-story structure located at the first turn of the racetrack, featuring premium hospitality experiences, private suites, indoor and outdoor dining, and covered box seating [4]. - The project will increase seating capacity from approximately 6,400 existing seats to about 7,800 premium seats [4]. Financial Aspects - CDI plans to invest between $280 million and $300 million in the Victory Run project [5]. - The construction is anticipated to begin after the 2026 Kentucky Derby and be completed by the 2028 Kentucky Derby, with interim upgraded seating available for the 2027 Kentucky Derby [5]. Strategic Importance - The CEO of CDI, Bill Carstanjen, emphasized that the Victory Run project will significantly improve guest experiences and contribute to long-term growth and shareholder value [6].

Company Highlights - Churchill Downs Incorporated (CDI) reported record third quarter net revenue of $683.0 million, an increase of $54.5 million or 9% compared to the previous year [6] - Net income attributable to CDI was $38.1 million, down $27.3 million or 42% due to a one-time, non-cash impairment [6][18] - Adjusted net income attributable to CDI increased to $77.1 million, up $5.0 million or 7% [6][37] - Adjusted EBITDA reached a record $262.3 million, an increase of $27.0 million or 11% [6][37] Consolidated Results - Net revenue for the third quarter of 2025 was $683.0 million compared to $628.5 million in 2024 [3] - Net income attributable to CDI was $38.1 million in 2025 versus $65.4 million in 2024 [3][18] - Diluted EPS attributable to CDI decreased to $0.54 from $0.86 [3] - Adjusted net income attributable to CDI was $77.1 million, up from $72.1 million [3] - Adjusted EBITDA increased to $262.3 million from $235.3 million [3] Segment Results Live and Historical Racing - Revenue increased to $305.7 million in Q3 2025 from $252.4 million in Q3 2024 [5] - Adjusted EBITDA rose to $116.4 million from $93.0 million [5] Wagering Services and Solutions - Revenue increased to $127.2 million from $118.7 million [9] - Adjusted EBITDA increased to $46.0 million from $42.5 million [9] Gaming - Revenue decreased to $265.5 million from $270.3 million [11] - Adjusted EBITDA remained consistent at $123.3 million [12] Capital Management - The company repurchased 515,527 shares at a total cost of $53.5 million during Q3 2025 [15] - The Board of Directors approved a $0.438 per share dividend, marking the fifteenth consecutive year of increased dividends [16] Tax Impact - The enactment of H.R. 1 in July 2025 is expected to significantly reduce the company's cash tax expense due to reinstated bonus depreciation rules and interest expense deduction limitations [17]

Core Insights - Everi has entered a seven-year agreement with Churchill Downs Incorporated (CDI) to provide a range of FinTech solutions, including CashClub® services, across CDI's gaming properties [1][2] - The partnership aims to enhance financial technology capabilities, improve compliance with Title 31, and optimize operational efficiency for CDI [2] - The collaboration builds on existing relationships, leveraging Everi's BeOn™ Venue Platform and IGT's historical horse racing games [2][3] Company Overview - IGT is a leading global provider of gaming, digital, and financial technology solutions, formed from the merger of International Game Technology PLC's Gaming & Digital Business and Everi Holdings Inc. [4] - IGT's offerings include gaming machines, game content, iGaming, sports betting, cash access, and loyalty solutions, aimed at delivering integrated experiences across various environments [4] - Churchill Downs Incorporated has been a key player in entertainment for over 150 years, known for the Kentucky Derby and expanding into live and historical racing, online wagering, and regional casino gaming [5]

Core Viewpoint - Churchill Downs Incorporated (NASDAQ:CHDN) is considered one of the most undervalued stocks on NASDAQ, with a current trading multiple of 9.4x expected EBITDA for 2027, below its long-term average of 11.7x, indicating potential for price appreciation [1]. Group 1: Investment Outlook - JMP Securities has reiterated a Market Outperform rating for Churchill Downs with a price target of $142, reflecting confidence in the company's growth prospects [1]. - The firm has identified several potential triggers for stock performance leading up to the 2026 Kentucky Derby, including historical racing machines (HRMs), financing decisions, and expected return on invested capital (ROIC) [2]. Group 2: Business Segments - Churchill Downs operates in the gambling sector, providing online betting, gaming, and racing services, and is structured into three main divisions: live and historical racing, wagering services, and gaming [3].

Core Viewpoint - Investors in the Gaming sector should consider Churchill Downs (CHDN) and Electronic Arts (EA) as potential undervalued stocks, with CHDN currently appearing to be the better option based on various valuation metrics [1]. Valuation Metrics - CHDN has a forward P/E ratio of 15.85, while EA's forward P/E is 20.39, indicating that CHDN may be undervalued compared to EA [5]. - The PEG ratio for CHDN is 1.82, compared to EA's PEG ratio of 1.91, suggesting that CHDN offers better value when considering expected earnings growth [5]. - CHDN's P/B ratio stands at 6.48, while EA's P/B ratio is 6.92, further supporting the notion that CHDN is a more attractive investment based on market value versus book value [6]. Earnings Outlook - CHDN has shown a stronger improvement in its earnings outlook compared to EA, contributing to its higher Zacks Rank of 2 (Buy) versus EA's 3 (Hold) [3][7]. - The overall valuation metrics and solid earnings outlook position CHDN as the superior value option in the current market [7].

Core Insights - Sin stocks, associated with industries like alcohol, tobacco, cannabis, weapons, and gambling, are often seen as morally controversial but have a history of delivering strong returns [2][3] - These stocks attract investors due to resilient demand, high profit margins, and strong cash flows, making them profitable even during economic downturns [3][4] Economic Defensiveness - Sin stocks benefit from persistent demand regardless of economic cycles, as people continue to engage in smoking, drinking, and gambling [4] - Companies in this sector often possess strong pricing power, brand loyalty, and consistent cash flows, appealing to investors focused on returns [4] Regulatory Moats - Many sin stocks enjoy regulatory barriers that deter new entrants, allowing established companies to dominate their markets [6] - Government oversight and compliance costs create high barriers, which, combined with aggressive marketing, help sustain profitability [6] Company Examples - Altria Group (MO) has maintained dividends and returns despite scrutiny and regulation, focusing on shareholder value through consistent payouts and buybacks [5] - Las Vegas Sands Corp. (LVS) operates in regions with entrenched gambling cultures, holding licenses and infrastructure that are difficult to replicate [7] Sector Trends - Consumer preferences are shifting, with alcohol companies benefiting from premiumization and tobacco firms pivoting to reduced-risk products [10] - The cannabis sector is expanding in legalized regions, presenting high-growth potential but also increased volatility [10] Regulatory Impact - Stricter regulations can limit operations, while favorable changes, such as new gambling legislation, can create new opportunities [11] - Global expansion into less restrictive markets enhances growth prospects for sin stocks [11] Investment Opportunities - Red Rock Resorts, Inc. (RRR) is positioned in the Las Vegas locals gaming market, benefiting from high barriers to entry and a strong loyalty program [14][15] - Churchill Downs Incorporated (CHDN) combines traditional racing with technology-driven platforms, focusing on disciplined capital deployment and innovation [17][18] - Anheuser-Busch InBev (BUD) leads in brewing with a strategy focused on premium segments and digital engagement, ensuring resilience across markets [19][20]

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value ...

Core Points - Churchill Downs Incorporated (CDI) will release its third quarter 2025 financial results after market close on October 22, 2025 [1] - A conference call to discuss the quarterly results will take place on October 23, 2025, at 8 a.m. ET [1] - Investors can access the call via an online webcast or by registering for a teleconference [2] - An online replay of the call will be available by noon ET on October 23, 2025 [2] - A news release with financial and statistical information will be accessible on the company's website [3] Company Overview - Churchill Downs Incorporated has been providing entertainment experiences for over 150 years, starting with the Kentucky Derby [4] - The company is headquartered in Louisville, Kentucky, and has expanded through acquisitions and operations in live and historical racing, online wagering, and regional casino gaming [4]

Core Viewpoint - Churchill Downs Incorporated (CDI) has completed the acquisition of a majority interest in a joint venture for Casino Salem, New Hampshire, which will allow the company to develop a charitable gaming, entertainment, and dining venue [1][2]. Group 1: Acquisition Details - The acquisition of Casino Salem was funded through the company's existing credit facility [2]. - The initial phase of Casino Salem opened on July 9, 2025, and future phases will include venue rebranding, gaming floor expansion, and new food and beverage concepts [2]. Group 2: Company Background - Churchill Downs Incorporated has over 150 years of experience in creating entertainment experiences, starting with the Kentucky Derby [3]. - The company has expanded through the acquisition and operation of live and historical racing venues, online wagering businesses, and regional casino properties [3].

Financial Data and Key Metrics Changes - The company reported all-time record net revenue of $934 million and adjusted EBITDA of $451 million for the second quarter of 2025, marking the fifth consecutive second quarter of record results [8][29] - Adjusted EBITDA for the Live and Historical Racing segment grew by $17 million or 6% compared to the prior year, driven primarily by HRM growth in Kentucky and Virginia [30] - The company generated $455 million or $6.29 per share of free cash flow in the first half of the year, with a reduction in maintenance capital projection by $10 million to $80 million to $90 million [35][36] Business Line Data and Key Metrics Changes - Churchill Downs Racetrack adjusted EBITDA was down $1 million, less than 1%, due to a high prior year comparison from the 150th Kentucky Derby [30] - All HRM properties in Kentucky delivered growth in the second quarter, with strong performance from Northern Kentucky and Louisville venues [31] - The Exacta business contributed over $3 million to adjusted EBITDA growth from third-party customers and HRM properties [32] Market Data and Key Metrics Changes - Wagering on the Derby race increased by 11% over last year's all-time high, with Derby Day wagering up 9% and Derby Week wagering rising 6% [15] - Virginia properties collectively delivered over $8 million of growth compared to the prior year, despite a higher handle tax rate [31] - The company expects to close the transaction for the Casino Salem project in New Hampshire in the third quarter, targeting a state-of-the-art gaming and entertainment destination [23] Company Strategy and Development Direction - The company aims to grow Derby Week through ticketing revenue, broadcast rights, wagering, sponsorships, and selective renovations [10][18] - A new seven-year contract with NBC is expected to provide a $10 million increase in adjusted EBITDA for 2026 [13] - Strategic investments in capital improvements are planned to enhance guest experiences and broaden appeal [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in Virginia and Kentucky, with a strong focus on building customer relationships and brand awareness [21][92] - The company anticipates generating significant growth for Derby Week in 2026 based on various catalysts [20] - Management highlighted the importance of international marketing efforts to enhance the global presence of the Kentucky Derby [50] Other Important Information - The company announced a new common stock repurchase program of up to $500 million, reflecting confidence in future growth [36] - The federal tax bill is expected to reduce cash taxes by $50 million to $60 million in 2025, with similar benefits anticipated for 2026 [37][56] Q&A Session Summary Question: Expectations around pricing at the Starting Gate Pavilion - Management expects increased demand and pricing for the Starting Gate Pavilion due to positive word-of-mouth from last year's introduction [40] Question: Discussion on the New Hampshire market - Management indicated that the Salem location is strategically positioned to tap into both New Hampshire and Massachusetts markets, with a strong demographic outlook [44] Question: International attendance and marketing for the Derby - Management noted that thoroughbred racing is a global sport, and efforts are underway to build international connections and sponsorships [50] Question: Impact of the federal tax bill on future cash flow - Management expects similar cash tax savings for 2026 as in 2025, with a focus on strategic capital management and shareholder returns [56][58] Question: Growth potential for HRM properties in Kentucky and Virginia - Management believes there is substantial runway for growth in both states, with strong metrics supporting continued expansion [61] Question: Strategies for driving visitation to The Rose - Management emphasized the importance of building brand awareness and customer relationships in the Northern Virginia market [90]