$Churchill Downs(CHDN)$ $Boyd Gaming(BYD)$ $Caesars Entertainment(CZR)$ 🏇💰📈 Churchill Downs rides the HRM wave; record Q3 lifts confidence in racing tech momentum 📈💰🏇
I’m seeing Churchill Downs ($CHDN) solidify its transition from a traditional gaming operator to a high-margin, tech-enabled racing powerhouse. The company’s third-quarter print confirmed that the heavy capital poured into Historical Racing Machines (HRMs) is paying off faster than expected, positioning the stock for a sustained rerating through 2026.
CDI’s HRM expansion is creating a structural earnings reset, driving a blend of growth visibility and shareholder returns that stands out in the consumer discretionary and leisure sector right now.
Churchill Downs | Historical Racing fuels record quarter despite impairment drag
Third-quarter 2025 net revenue hit $683 million, up 9% year over year, while Adjusted EBITDA reached a record $262.3 million, +11% YoY. Shares closed 20Oct25 (NASDAQ) at $101.00, +2.6% on the day. However, reported net income fell 42% to $38.1 million, $0.54 EPS, due to a $45.1 million pre-tax impairment tied to Chasers’ gaming rights following the Casino Salem acquisition.
The real story lies beneath the impairment. Live and Historical Racing revenue jumped 21%, and segment EBITDA soared 25%, confirming that CDI’s Virginia and Kentucky expansions are delivering high-margin, recurring cash flow. Wagering services grew 7%, underpinned by TwinSpires and Exacta technology integration. Gaming revenue declined 2%, flat ex-Louisiana, reflecting the planned market exit.
[Image: Weekly chart shows $CHDN coiled within an ascending megaphone, rebounding off long-term support near $90 with resistance around $175.]
Momentum is rebuilding as the stock defends its multiyear trendline. RSI has stabilized near 50 and MACD is turning up on the weekly frame, suggesting a potential reacceleration into the $118 – $130 zone. Option flow is balanced but shows renewed bullish skew in January $120 calls with net premium build-up.
I’m watching $95 as the base case support and $125 as the breakout trigger, targeting $160 on a 12-month horizon. A close below $88 would invalidate the bullish setup. Macro-wise, lower rate expectations into Q1 2026 and NBC’s 2026 primetime Kentucky Oaks broadcast add visibility to racing revenues and brand reach.
Strategically, the company is pushing ahead with its “Victory Run” Derby expansion ($280 to $300 million, completion by 2028) and the permanent Casino Salem venue ($180 to $200 million, opening 2027). Maintenance capital was trimmed to $75 to $85 million for 2025 while project capital was reaffirmed at $200 to $240 million, supporting strong free cash flow conversion. Shareholder returns remain robust with a $0.438 dividend (+7%) and $53.5 million in buybacks.
I’m convinced Churchill Downs is executing a measured shift toward an asset-light, data-rich model that blends sports heritage with modern gaming analytics. With net leverage down to 4.1× and segment margins expanding, this horse is gearing up for another leg higher once the market looks past one-time charges and sees the cash engine under the hood.
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- Cool Cat Winston·2025-10-27TOP🐎 I’m really impressed with how you tied the HRM growth story into a broader transformation narrative. The 25% EBITDA jump in racing is no small feat. It reminds me of how $BYD shifted to a margin-led model a few years back. Churchill’s pivot feels even more strategic given their hybrid tech-racing edge.2Report
- PetS·2025-10-27TOP🎰 The impairment timing had me thinking too. You nailed that nuance between accounting noise and underlying growth. CDI’s HRM uplift easily offsets the drag. It’s almost identical to how $PENN refocused post-acquisition. The market’s probably underpricing that operational clarity.3Report
- Tui Jude·2025-10-27TOP💵 I’ve been following your take on CDI’s leverage trends closely. That 4.1x ratio looks manageable, especially considering the $53.5M buybacks and rising dividend. It’s got shades of $CZR’s turnaround years ago, but CDI’s cap discipline is cleaner. I’m curious how the “Victory Run” ROI unfolds through 2028.1Report
- Merle Ted·2025-10-28I think there is a rotation with the 5 day and the 22nd Put/Call Rotation Sentiment Change. CHDN, LMT, and WM seem to be on the winning side of money moving.LikeReport