Churchill Downs Incorporated (NASDAQ:CHDN): Has Recent Earnings Growth Beaten Long-Term Trend?
After looking at Churchill Downs Incorporated’s (NASDAQ:CHDN) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for Churchill Downs
Were CHDN’s earnings stronger than its past performances and the industry?
I look at the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method allows me to assess different stocks on a similar basis, using the latest information. “For Churchill Downs, its “, latest earnings is $129.4M, which compared to the previous year’s level, has moved up by 47.55%. Given that these figures are somewhat short-term, I’ve determined an annualized five-year figure for Churchill Downs’s earnings, which stands at $64.1M. This shows that, on average, Churchill Downs has been able to increasingly raise its net income over the past few years as well.
How has it been able to do this? Let’s take a look at if it is merely attributable to an industry uplift, or if Churchill Downs has experienced some company-specific growth. In the last couple of years, Churchill Downs grew its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 13.33% over the past year, and 11.04% over the previous five years. This means any uplift the industry is gaining from, Churchill Downs is able to leverage this to its advantage.
What does this mean?
Though Churchill Downs’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Churchill Downs to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CHDN’s future growth? Take a look at our free research report of analyst consensus for CHDN’s outlook.
2. Financial Health: Is CHDN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
