On December 18, 2023, at 05:43h, Churchill Downs (NASDAQ: CHDN) announced that it will be repurchasing one million of its shares for $123.75 apiece from an affiliate of the Duchossois Group, a privately held investment company. The transaction is valued at $123.75 million and was approved by the gaming company’s board of directors in a privately negotiated deal. The per-share price represents a discount from Monday’s closing price of $129.97. The company plans to repurchase the shares using available cash and borrowings under its senior secured credit facility, and the transaction is expected to close on January 2, 2024.
The buyback is not related to the gaming company’s previously announced share repurchase plans. The move could signal to investors that the company sees value in its shares, as it has a history of shareholder-friendly actions. In April, Churchill Downs announced a stock split on a 2-for-1 basis, and in September 2021, it revealed a $500 million repurchase program. Additionally, its annual dividend has grown by more than 40% since 2010.
As of Monday’s closing, the company had 74.80 million shares outstanding and a market capitalization of $9.69 billion, with the stock up 22.94% year-to-date. While it’s unclear how long the Duchossois Group has been an investor in the company, it is a privately held firm with operating businesses and an investment company under its umbrella.
Despite concerns about the U.S. horse racing industry, Churchill Downs is a favorite among analysts on Wall Street. The company has no exposure to the Las Vegas Strip, and it is believed that it will benefit from an extensive pipeline of high return on investment projects, as well as the acquisition of Exacta and P2E, and the growth of historical horse racing machines. Of the nine analysts covering the company, seven rate it the equivalent of a “strong buy,” with the other two rating it as a “buy.” The average 12-month price target on the stock is $142.56, implying a 9.69% upside from Monday’s close, and over the past three years, no analysts have issued a “sell” rating on Churchill Downs.