What Happened?

Shares of racing, gaming, and entertainment company Churchill Downs (NASDAQ: CHDN) jumped 7.4% in the afternoon session after the company reported strong third-quarter financial results that beat Wall Street's expectations for both revenue and profit. 

The company posted revenue of $683 million, an 8.7% increase compared to the same period in the previous year. Its adjusted earnings per share of $1.09 was 10.9% higher than analyst estimates. The company's adjusted EBITDA, a key measure of operational profitability, was $262.3 million, also beating expectations. These positive results signaled to investors that the company's core business was performing well.

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What Is The Market Telling Us

Churchill Downs’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock gained 3.7% on the news that investment firm Stifel reiterated its Buy rating on the stock ahead of the company's third-quarter earnings report. Stifel kept its price target at $133.00. The positive sentiment was echoed by another firm, Citizens, which also restated its Market Outperform rating on Churchill Downs, holding its price target at $142.00. Both firms expressed confidence before the company was scheduled to release its financial results. The reiterations signaled continued analyst belief in the company's performance leading up to the earnings announcement.

Churchill Downs is down 21.4% since the beginning of the year, and at $103.43 per share, it is trading 29.9% below its 52-week high of $147.45 from November 2024. Investors who bought $1,000 worth of Churchill Downs’s shares 5 years ago would now be looking at an investment worth $1,194.

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