Churchill Downs’ second quarter results surpassed Wall Street’s expectations, with management attributing the outperformance to strong demand for the Kentucky Derby and continued momentum in the company’s Historical Racing Machine (HRM) operations. CEO Bill Carstanjen emphasized that ticketing strategies, increased premium experiences, and enhanced media exposure were central to driving higher attendance and wagering. He pointed to the expansion of Derby Week, saying, “We will continue to deliver special customer experiences while selectively and thoughtfully pricing them based on rising customer demand, especially for our premium offerings.”

Is now the time to buy CHDN? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Churchill Downs’s Q2 Earnings Call

• Barry Jonas (Truist) asked about pricing expectations for lower-end Derby Week experiences; CEO Bill Carstanjen said demand should improve as word-of-mouth spreads about new offerings like the Starting Gate Pavilion.
• David Katz (Jefferies) pressed for detail on the New Hampshire market opportunity; Carstanjen said the Salem location is well positioned to attract both New Hampshire and Massachusetts customers, but more specifics will come after deal closure.
• Chad Beynon (Macquarie) inquired about international attendance and marketing; Carstanjen emphasized multi-year plans to grow international presence, leveraging existing interest in Thoroughbred racing and targeting high-end consumers and sponsors.
• Daniel Guglielmo (Capital One Securities) questioned the growth runway for HRM markets in Kentucky and Virginia; Carstanjen stated that both markets have substantial untapped potential, with positive current performance metrics.
• Joe Stauff (Susquehanna) asked about the strategic intent behind the Kentucky Oaks’ schedule change; Carstanjen confirmed the move is designed to drive both attendance and sponsorship by raising the event’s national profile.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) the impact of prime-time Kentucky Oaks coverage and related sponsorship growth, (2) the ramp and customer acquisition at new and expanded HRM properties in Kentucky, Virginia, and New Hampshire, and (3) progress on capital projects at Churchill Downs Racetrack. Developments in regulatory approvals and execution of new gaming market entries will also be closely watched.

Churchill Downs currently trades at $110.60, up from $109.20 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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