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Churchill Downs Incorporated

Intrinsic Value Analysis (Discounted Cash Flow)Industry: Gambling, Resorts & CasinosSector: Consumer Cyclical

Fair Value Summary

Current Price$117.58
5Y Range58.63 – 122.22
5Y Selected90.42
(-) Safety Margin77.43%
5Y Buy Price$20.41
Upside (to Buy Price)-82.64%
10Y Range75.99 – 143.54
10Y Selected109.76
(-) Safety Margin77.43%
10Y Buy Price$24.77
Upside (to Buy Price)-78.93%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.9797
Revenue R2 (10Y)0.6723
Net Income R2 (5Y)0.7127
Net Income R2 (10Y)0.4275
EBITDA R2 (5Y)0.9156
EBITDA R2 (10Y)0.7483
FCF R2 (5Y)0.1030
FCF R2 (10Y)0.0448
Safety Score0.2257

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth19.41%17.70%15.99%14.27%12.56%10.85%9.14%7.42%5.71%4.00%
Revenue3,265.103,843.024,457.425,093.715,733.616,355.706,936.467,451.497,877.158,192.24
EBITDA1,144.631,347.231,562.621,785.682,010.002,228.092,431.682,612.232,761.462,871.91
D&A-260.81-306.98-356.06-406.88-458.00-507.69-554.08-595.22-629.22-654.39
EBIT883.811,040.251,206.561,378.791,552.001,720.401,877.602,017.012,132.232,217.52
Pro forma Taxes-225.57-265.50-307.94-351.90-396.11-439.09-479.21-514.79-544.20-565.97
NOPAT658.24774.75898.611,026.891,155.891,281.311,398.391,502.221,588.031,651.55
Capital Expenditures-538.31-633.60-734.89-839.80-945.30-1,047.86-1,143.61-1,228.52-1,298.70-1,350.65
NWC Investment83.3690.7696.4999.93100.4997.7091.2180.8866.8549.48
(+) D&A260.81306.98356.06406.88458.00507.69554.08595.22629.22654.39
Free Cash Flow464.10538.89616.27693.91769.09838.84900.07949.80985.401,004.78
Diluted Shares Outstanding73,075,000.0073,075,000.0073,075,000.0073,075,000.0073,075,000.0073,075,000.0073,075,000.0073,075,000.0073,075,000.0073,075,000.00

Discounting Periods

MetricDec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32Dec-33Dec-34
Period Start9/30/251/1/261/1/271/1/281/1/291/1/301/1/311/1/321/1/331/1/34
Period End12/31/2512/31/2612/31/2712/31/2812/31/2912/31/3012/31/3112/31/3212/31/3312/31/34
Mid-Point11/15/257/2/267/2/277/1/287/2/297/2/307/2/317/1/327/2/337/2/34
Time (t)0.100.461.462.463.464.465.466.467.468.46
Valuation Date1/16/26

Base Case Projected Flows

WACC: 9.10%Terminal Growth: 2.34%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.880.810.740.680.620.570.520.48
PV UFCF460.08517.74542.70560.11569.02568.87559.49541.17514.64481.00
Raw: 11,639.67
8,244.91
Raw: 15,206.69
6,969.41

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value10,894.5612,284.23
(-) Net Debt4,802.304,802.30
Equity Value6,092.267,481.93
(/) Shares Out73.0873.08
Fair Value$83.37$102.39
(-) Safety Margin77.43%77.43%
Buy Price$18.82$23.11
Current Price$117.58$117.58
Upside (to Buy Price)-84.00%-80.35%

Conservative Projected Flows

WACC: 10.10%Terminal Growth: 1.84%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.870.790.720.650.590.540.490.44
PV UFCF459.66515.57535.52547.68551.34546.19532.30510.20480.77445.26
Raw: 9,479.86
6,476.72
Raw: 12,384.99
5,230.61

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value9,086.4810,355.09
(-) Net Debt4,802.304,802.30
Equity Value4,284.185,552.79
(/) Shares Out73.0873.08
Fair Value$58.63$75.99
(-) Safety Margin77.43%77.43%
Buy Price$13.23$17.15
Current Price$117.58$117.58
Upside (to Buy Price)-88.75%-85.41%

Aggressive Projected Flows

WACC: 8.10%Terminal Growth: 2.84%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.890.830.760.710.650.600.560.52
PV UFCF460.50519.93550.04572.94587.45592.72588.34574.34551.23519.96
Raw: 15,030.88
11,042.48
Raw: 19,637.15
9,774.00

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value13,733.3415,291.47
(-) Net Debt4,802.304,802.30
Equity Value8,931.0410,489.17
(/) Shares Out73.0873.08
Fair Value$122.22$143.54
(-) Safety Margin77.43%77.43%
Buy Price$27.58$32.40
Current Price$117.58$117.58
Upside (to Buy Price)-76.54%-72.45%

Reverse DCF: Market Implied Growth

Current Price$117.58
WACC Used9.1%
IMPLIED REVENUE GROWTH142.00%
Metric2027202820292030203120322033203420352036
Implied Revenue6,979.8916,891.6440,878.5298,927.81239,409.64579,381.851,402,129.543,393,215.108,211,729.6719,872,746.66
Constant Implied Growth142.00%142.00%142.00%142.00%142.00%142.00%142.00%142.00%142.00%142.00%
Implied Free Cash Flow0.701.694.099.8923.9457.94140.21339.32821.171,987.27
Discount Factor0.930.810.740.680.620.570.520.480.440.40
Present Value of Implied FCF0.651.363.026.7114.8833.0173.23162.44360.32799.27

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$68.6025.01%$48.57-29.19%
20182018-12-31$40.6619.45%$10.69-73.70%
20172017-12-31$38.7815.62%$19.79-48.97%
20162016-12-31$25.0716.70%$43.3873.02%
20152015-12-31$23.585.72%$34.0144.25%
20142014-12-31$15.886.07%$9.33-41.25%
20132013-12-31$14.946.61%$14.93-0.10%
20122012-12-31$11.079.70%$20.7687.53%
20112011-12-31$8.6916.84%$44.21408.79%
20102010-12-31$7.2311.29%$-4.14-157.24%
20092009-12-31$6.224.73%$-4.44-171.33%
20082008-12-31$6.747.70%$9.2937.82%
20072007-12-31$8.998.59%$0.68-92.42%
20062006-12-31$7.128.25%$6.33-11.13%
20052005-12-31$6.126.54%$-11.57-288.97%
20042004-12-31$7.451.51%$-8.49-213.95%
20032003-12-31$6.06-2.17%$-0.32-105.26%
20022002-12-31$6.36-2.45%$0.68-89.33%
20012001-12-31$6.160.14%$5.46-11.43%
20002000-12-31$4.97-0.41%$-1.17-123.44%
19991999-12-31$3.76-0.38%$-60.50-1,709.14%
19981998-12-31$5.48-0.71%$-3.42-162.38%
19971997-12-31$3.669.10%$3.14-14.10%
19961996-12-31$3.0020.90%$10.08236.09%
19951995-12-31$2.9222.80%$6.68128.63%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$106.14
Median
$101.69
10th Percentile
$73.74
90th Percentile
$142.14

Fair Value Distribution

$49.75 - $59.02
10
$59.02 - $68.30
33
$68.30 - $77.57
105
$77.57 - $86.85
119
$86.85 - $96.12
150
$96.12 - $105.40
138
$105.40 - $114.67
121
$114.67 - $123.95
93
$123.95 - $133.22
68
$133.22 - $142.50
66
$142.50 - $151.77
25
$151.77 - $161.05
22
$161.05 - $170.32
17
$170.32 - $179.60
10
$179.60 - $188.87
7
$188.87 - $198.15
8
$198.15 - $207.42
3
$207.42 - $216.70
1
$216.70 - $225.97
2
$225.97 - $235.25
2