Churchill Downs Incorporated (CHDN): A Bull Case Theory 

We came across a bullish thesis on Churchill Downs Incorporated on Valueinvestorsclub.com by BSCM753. In this article, we will summarize the bulls’ thesis on CHDN. Churchill Downs Incorporated’s share was trading at $97.93 as of January 29th. CHDN’s trailing P/E was 17.98 according to Yahoo Finance.

CHDN, Churchill Downs, Tips for betting on horses

Churchill Downs Incorporated operates live and historical racing entertainment venues, online wagering businesses, and regional casino gaming properties in the United States. CHDN represents a unique investment opportunity driven by the enduring value of the Kentucky Derby and the company’s high-quality asset base. The 2025 Derby, the 151st running, faced temporary headwinds including inclement weather, a disappointing return from a new Starting Gate Courtyard & Pavilion, and the impact of early-April Liberation Day, which collectively weighed on EBITDA despite comparable adjusted earnings to 2024.

These factors, combined with a prudently delayed $900 million capital expenditure program due to emerging tariffs, led to a contraction in the implied multiple for the Derby and created a market mispricing of CHDN’s assets. The Derby, which attracts a week-long attendance exceeding 370,000, remains an extremely scarce and highly monetizable event, comparable in cultural and economic impact to several Super Bowls.

Management expects the 2026 Derby to revert to historical growth, aided by a new NBC broadcast agreement adding $10 million of EBITDA, incremental ticket pricing increases for the revamped pavilion, and a more stable macroeconomic environment, projecting $15–20 million in additional EBITDA.

Beyond the Derby, CHDN’s diversified portfolio—including Historical Horse Racing, Regional Casinos, and TwinSpires—provides resilient cash flows and attractive EBITDA multiples. The company has aggressively repurchased $250 million of shares in Q2 2025 at $97.58 per share, retiring 3.5% of equity, with an additional $500 million buyback authorization, demonstrating disciplined capital allocation and confidence from management.

Using conservative 2026 Derby EBITDA estimates, the asset is undervalued at roughly 6x EBITDA, with upside scenarios ranging from $125 to $153 per share and potential to more than double under higher multiples. With upcoming catalysts including re-announcement of growth capex plans, robust 2026 Derby results, strategic sponsorship expansion, and continued share repurchases, CHDN presents a compelling risk/reward profile with multiple avenues for significant upside.

Previously, we covered a bullish thesis on MGM Resorts International (MGM) by David in April 2025, highlighting its resilient gaming operations, asset-light transition, aggressive buybacks, and irreplaceable brand and real estate. The stock has appreciated approximately 26.76% since coverage. The thesis still stands as MGM continues to generate strong cash flows. BSCM753 shares a similar view but emphasizes Churchill Downs’ (CHDN) Kentucky Derby, temporary EBITDA headwinds, and catalysts for growth.

Churchill Downs Incorporated is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held CHDN at the end of the third quarter which was 43 in the previous quarter. While we acknowledge the risk and potential of CHDN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CHDN and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.