) is a Zacks #1 Rank (Strong Buy) due to four straight positive
earnings surprises and rising estimates. Derby day is May 5, 2012
and getting in ahead of the other horses could help you get to the
finish line first.
Churchill Downs Incorporated provides pari-mutuel horseracing
content for consumers and businesses. It offers gaming products
through its casino operations in Mississippi, and its slot and
video poker operations in Louisiana and Florida. CHDN also owns
several casinos. Churchill Downs Incorporated was founded in 1928
and is headquartered in Louisville, Kentucky.
CHDN Tops Expectations in Last Four Quarters
CHDN has beaten the Zacks Consensus Estimate in each of the last
four quarters. Over the course of those four beats, Wall Street has
rewarded shareholder each time with a higher stock price following
The biggest increase came after the September 2011 quarter when the
company earned $1.16 per share. That was $0.85 ahead of the Zacks
Consensus Estimate or a beat of approximately 275%. The stock moved
14% after the huge beat.
CHDN Recently Reported Earnings
On March 12, 2012 the company reported revenue of $149 million
roughly $2 million less than the Zacks Consensus Estimate but
higher than the $137 million reported in the year ago period. EPS
of $0.25 was $0.33 ahead of the estimate or a 412% beat. As a
result the stock moved higher by 8.3%.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up their
earnings estimates for 2012. The Zacks Consensus Estimate for 2012
EPS moved from $2.85 in February 2012 to the current level of
$3.02. 2013 estimates also moved higher from the $3.30 level
reached in February 2012 to the current level of $3.40.
CHDN rides with some reasonable valuation metrics in comparison the
industry average. With a 16x trailing twelve month PE, CHDN is
trading at a discount the 24x industry average. The forward PE of
19x is also a discount, but not as steep, to the 22x industry
average. Price to book shows a slight premium for shares of CHDN
while price to book carries a slight discount to the industry
A quick look at the price and consensus chart shows that analysts
have been on the money when following CHDN. Of late, the estimates
have risen faster than the stock but if history comes even close to
repeating itself; the stock price is poised for a charge.
Aggressive stock investors will like the increased earnings, the
history of solid surprises and very reasonable valuation. CHDN is a
Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
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