Churchill Downs reports record first-quarter sales, analysts bullish on Virginia real estate
Churchill Downs (NASDAQ: CHDN ) shares rose 3.74% in after-hours trading Wednesday after the company reported record first-quarter sales and profits that topped Wall Street expectations.
The operator of Kentucky's famed namesake track said it earned $1.08 a share in the first three months of the year on revenue of $590.9 million. Analysts expected profit of 76 cents on revenue of $564 million. Revenue from Churchill's historic horse racing operations in Kentucky increased from $33.1 million to $248.9 million during that period. Stifel analyst Jeffrey Stantial highlighted the strength of the operator's Virginia assets, including the Historic Racing Machine (HRM) location.
We believe the results support our pick list thesis, specifically 1) CHDN's meaningful sequential acceleration in VA's HRM attributes (skill play banned in mid-December; improving HRM offerings) and 2) Rivers' outstanding strong Operational trends. " the analysts wrote.
The analyst has a "buy" rating on Churchill with a $150 price target - a forecast that will be reviewed ahead of a conference call with analysts on Thursday morning.
Live historic match, TwinSpires boosts Churchill Q1 result
Churchill Downs' strong first-quarter results were driven by encouraging results from the operator's historic racing and live horse racing businesses, as well as its TwinSpires online gaming division.
Churchill's historic and live racing revenue rose 15% between January and March, while earnings before interest, tax, depreciation and amortization rose 23%. At TwinSpires, those metrics increased 18% and 35% year over year, respectively, the gaming company said.
These additions come ahead of the Kentucky Derby scheduled for Saturday, May 4th. The 150th running of horse racing's crown jewel race could become another Churchill record this year as organizers make major investments at the namesake Kentucky racetrack, including new paddocks and more seats, to expand capacity and increase fortunes to attract bettors.
HRM Properties in Virginia experienced the strongest year-over-year growth, Stantial noted, highlighting gains at Churchill Downs, the state's largest gaming operator.
Speaking of Virginia...
Whether it's an HR venue or a traditional gaming property, Virginia figures prominently in Churchill Downs' long-term investment thesis.
“The monthly data reported by the VRC shows significant sequential improvement in year-over-year growth across most of CHDN’s VA assets, which may be a combination of 1) the annualization of new supply headwinds and 2) the implementation of the mid-term competitive skill gaming ban. Stantial noted that in December Reflecting "3) improvements in the CHDN facility's HR management offerings and layout, and 4) wider ramps for the relatively new facility."
The analyst also noted that Churchill's recently opened hotel and casino in Terre Haute, Indiana, is off to a good start and that location may be discussed in more detail on the conference call.
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Source: www.casino.org
