Shares of Churchill Downs Incorporated (CHDN - Free Report) have gained 35.5% year to date, outperforming the 25.3% growth of its industry. We believe higher earnings growth is likely to aid the stock in maintaining its solid performance in the quarters ahead.
Moreover, the company is executing on several investments across its Casino, Big Fish, TwinSpire and Derby businesses that are expected to enhance shareholder value over the next few years.
Further, the Zacks Consensus Estimate for current-year’s earnings has moved up 6% in the last 60 days, thus substantiating the stock’s Zacks Rank #2 (Buy).
What Makes Churchill Downs a Solid Pick?
Solid Estimated EPS Growth: Arguably, nothing is more important than earnings growth as surging profit levels is often an indication of strong prospects (and stock price gains) for the company in question.
While Churchill Downs’ has a historical EPS growth rate of 12.3%, investors should really focus on its projected growth. Here, the company is looking to grow at a rate of 22.6%, significantly higher than the industry average of 17.8%.
Superior Return on Equity: Churchill Downs delivered return on equity (ROE) of 15.8% in the trailing 12 months compared with the industry’s average of 7.5%. This supports its growth potential and indicates that the company reinvests more efficiently compared with its peers.
Good VGM Score: Churchill Downs has a VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.
Some other top-ranked stocks in the Zacks Consumer Discretionary sector include Malibu Boats, Inc. (MBUU - Free Report) , Town Sports International Holdings, Inc. (CLUB - Free Report) and Callaway Golf Company (ELY - Free Report) . While Malibu Boats flaunts a Zacks Rank #1, Town Sports International and Callaway Golf hold the same bullish rank as Churchill Downs. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the trailing four quarters, Malibu Boats, Town Sports International and Callaway Golf pulled off an average positive earnings surprise of 6.01%, 52.48% and 23.29%, respectively.
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