Churchill Downs: A 150-Year-Old Cash Machine Trading At A Discount

Kenio Fontes2.14K FollowersFollow5ShareSavePlay(10min)CommentsSummaryChurchill Downs Incorporated offers a compelling long-term equity case, driven by its unique assets and robust compounding potential.CHDN’s moat is anchored by the Kentucky Derby, but growth is also fueled by expansion in Historical Racing Machines and premium ticketing initiatives.Financials are strong, with a 10-year EBIT CAGR of 16.7%, healthy cash flow, and disciplined capital allocation toward both expansion and buybacks.At a forward EV/EBITDA of 9x versus a 5-year average of 13x, CHDN is rated a buy, supported by both valuation and sustainable EPS compounding. CRobertson/iStock Editorial via Getty Images I am not American, and I know very little about horse racing. Because of that, I basically didn't know what the Kentucky Derby was, and what I did know was quite superficial. So, when I started the analysis of ChurchillThis article was written byKenio Fontes2.14K FollowersFollowEquity Research Analyst with a broad career in the financial market, covered both Brazilian and global stocks. As a value investor, my analysis is primarily fundamental, focusing on identifying undervalued stocks with growth potential. Feel free to reach out for collaborations or to connect!Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.