Churchill Downs — owner and operator of the Kentucky Derby — stumbled on news it is suspending racing from June 7 through July 3, following the death of 12 horses earlier this month. But top money managers continue to wager on CHDN stock as it looks to find its footing and gallop toward the all-time high it hit last month.
Churchill Downs made the latest list of new buys by the best mutual funds, These top-performing institutional investors betting an estimated $136 million on CHDN stock.
Just ahead of the 149th running of the Kentucky Derby on May 6, Churchill Downs was profiled in the IBD New America on May 5. As the company launches new safety initiatives, CHDN stock maintains its spot on the IBD 50 and IBD Sector Leaders.
Churchill Downs also places on the IBD Leaderboard watchlist.
Kentucky Derby Owner Wagers On Continued Growth
It all began with an inaugural run in 1875 featuring two flagship horse races: the Kentucky Oaks and the Kentucky Derby. Today, the Kentucky Derby is the longest continually held annual sporting event in the U.S., bringing in over $400 million annually to the local economy.
Headquartered in Louisville, Ky., the company has expanded live and historical racing entertainment venues and the growth of horse racing online wagering. The company also continues to bolster development of regional casino gaming properties.
Sporting the highest-possible 99 Composite Rating, Churchill Downs has generated average earnings growth of 122% over the last three years. In Q1, it posted a 66% EPS gain to 98 cents. Analysts are betting on 31% growth in Q2 and a 51% gain to $6.19 per share for the full year. Wall Street forecasts a 22% year-over-year rise to $7.53 a share in 2024.
On the revenue side, Churchill Downs has posted two quarters of accelerating growth. Sales rose from a 3% slowdown to $383.1 million in Q3 of last year to a 54% spike to $559.5 million in Q1.
Churchill Downs Finds Support After Huge Jump
On April 26, the legendary Kentucky Derby owner jumped out of the gate to a one-day gain of over 14% on earnings. CHDN stock got tripped up on news of the deaths of the racehorses but found support at its 50-day moving average.
The stock is now vying for support at its 21-day exponential moving average.
Churchill Downs is looking to complete an early-stage flat base with a 150.45 buy point. As the right side of the base forms, watch the trajectory of the relative strength line. A rebounding RS line would point to increasing market leadership.
Look for the stock to hold its ground while racing is suspended then gallop into a buy zone, which extends to 157.97.
On Monday, Churchill Downs edged lower in light volume, showing large investors are not racing to dump shares.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
