Churchill Downs Goes Up

The run for the roses took place last Saturday in front of a record-breaking crowd of more than 163,000 people. With a clear weather report and booked hotels for miles around, it was clear to some investors that it would be a big day for Churchill Downs CHDN. Trading before the Kentucky Derby could be characterized as a flop as investors ran for cover and sold shares in the race track before the close. The result was a loss for the day and mixed enthusiasm for the Derby. On Monday, May 9, the stock barely budged despite the record attendance and brilliant weather, which no doubt contributed to higher-than-expected sales of certain libations. Maybe it was the hangover that lasted through Monday, but from that point on, Churchill Downs has been running every bit as hard as Kentucky Derby winner, "Animal Kingdom." Today is no exception with the stock climbing higher by two more points, or about 4.3%. The Kentucky Derby is the signature event for Churchill Downs and helps the company post its largest profit of any quarter. With the record crowd being factored into projections, investors are making a statement in pushing the stock up 15% in the four days following the race. Other events in the month include the already run Kentucky Oaks and the $100,000 Louisville Handicappers on May 28, 2011. These other events could also help the company post better than expected results. The company is expected to release 2Q2011 earnings on or about July 28, 2011. Wall Street consensus EPS is $2.17 ($1.83 a year ago) and revenues of $248M ($200M a year ago).