CHDN · Churchill Downs, Incorporated

The thesis

Churchill Downs' record third quarter and new $750 million buyback still support the shares, even as Virginia machine revenue keeps falling. Monthly Virginia figures and the fourth-quarter report, due around late February 2027, settle whether that decline is contained.

Two adverse Virginia facts have arrived since the third-quarter report. CDC Gaming reported on 5 November 2026 that revenue from the state's historical racing machines (HRMs), all owned by Churchill Downs, fell 5.6% in October at a blended rate, and fell 2% excluding Richmond. Voters in Amherst County and Pulaski rejected new Rosie's venues on 3 November 2026. Neither breaks the case: the October decline is narrower than the 10% same-store drop CDC Gaming reported for August, and the two venues were proposals with no revenue today.

The 28 October 2026 release showed net revenue of $696 million, up 2%, and adjusted earnings per share (EPS) of $1.23, up from $1.09. Benzinga put the EPS consensus at $1.15 and the revenue estimate at $696.6 million. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $264 million, against $262 million a year earlier.

The narrative is maturing: the Kentucky Derby and HRM growth story is well known, and the news since the 28 October 2026 report has been analyst target changes and monthly Virginia figures.

Bullish and bearish views on Churchill Downs, Incorporated

The bull case on Churchill Downs, Incorporated (CHDN), in brief: Virginia's decline narrowed in October. The bear case: Richmond is still falling fast.

Bull case

• Virginia's decline narrowed in October. CDC Gaming reported a 5.6% blended fall for October on 5 November 2026, after same-store falls of 11.7% in July and 10% in August. The Rose in Northern Virginia led the state with $15.2 million of October revenue, up 5.7%.
• Kentucky machines are still growing. Kentucky HRM revenue rose $11 million and adjusted EBITDA rose $6 million year on year in the third quarter, according to the 28 October 2026 release. CDC Gaming reported on 29 October 2026 that Kentucky HRM revenue rose 11% in September.
• Gaming and wagering both grew profit. Gaming adjusted EBITDA rose to $128 million from $123 million in the third quarter. Wagering Services and Solutions rose to $48 million from $46 million, on TwinSpires horse-racing handle of $485 million against $472 million.
• Capital return is getting bigger. On 27 October 2026 the board approved a $750 million repurchase program, replacing the old plan with $306 million remaining. The quarterly dividend rises 7% to $0.469 per share, payable 5 January 2027.
• Analysts raised targets after the report. BofA Securities raised its target to $105 from $100 on 2 November 2026 and kept its positive rating. JPMorgan moved to $120, Mizuho to $126 and Barclays to $133 on 30 October 2026.
• Nine-month earnings grew. Adjusted EBITDA for the first nine months of 2026 was $998 million, against $958 million a year earlier. Adjusted EPS was $5.89, against $5.26 (Q3 2026 release).

Bear case

• Richmond is still falling fast. CDC Gaming reported on 5 November 2026 that Richmond-area Rosie's revenue fell 17.8% in October to $10.4 million, or $284 per machine per day, the lowest in the state. Colonial Downs fell 18.1% to $3.5 million and Emporia fell 16.3% to $1.8 million.
• Virginia profit is already shrinking. Virginia HRM adjusted EBITDA fell $6 million year on year in the third quarter, mostly in Central Virginia. The company blamed more competition and a new $5 million tax under the structure effective 1 July 2026. CDC Gaming ties the pressure to the temporary casino in Petersburg.
• Voters closed two growth sites. Unofficial results reported by Virginia Business on 4 November 2026 showed 50.66% opposed in Amherst County (7,057 against, 6,874 for) and 56.46% opposed in Pulaski. Jefferies had expected both votes to favor the company. Local news reports say Virginia law keeps the question off Pulaski's ballot for three years.
• The largest segment shrank in profit. Live and Historical Racing adjusted EBITDA fell to $111 million from $116 million in the third quarter, even though segment revenue rose to $315 million from $305 million.
• Leverage is meaningful. Net bank leverage was 3.8 times at 30 September 2026. On 19 October 2026 the company redeemed its 2027 senior notes with revolving-credit borrowings, which leaves the buyback competing with debt reduction for cash.

Price setup

The last close was $98.18 on 5 November 2026, up from $94.83 on 30 October 2026, in adjusted daily closes. The shares sit 16.5% below their 52-week high of $117.59 and rose 13.7% over three months. The gain held through the referendum losses and the October revenue report published on 5 November 2026.

Crowding shows up in momentum. The 14-day relative strength index, a gauge on which readings above 70 are commonly called overbought, stood at 81.5 on 5 November 2026, up from 79.5 in the previous note. Other signs point the other way: the company is shrinking its share count, and the next earnings report is more than three months out.

Analyst targets bracket the 52-week high. BofA's $105 sits below it, while JPMorgan's $120, Mizuho's $126 and Barclays' $133 sit above it.

Catalysts, next 30 days

• ~30 November 2026, est.: Kentucky HRM revenue for October, based on CDC Gaming's reports of 31 August 2026 and 29 October 2026. It shows whether the 11% September gain held.
• ~4 December 2026, est.: Virginia HRM revenue for November, based on CDC Gaming's reports of 4 September 2026 and 5 November 2026. It shows whether October's narrower decline continues.
• December 2026, day unconfirmed: Certification of the Amherst County and Pulaski results. The Amherst margin was under 200 votes, according to WSET.

Later events on which the case turns:

• ~2027-01, est.: Virginia's 2027 legislative session, where online casino gaming could return as an issue.
• ~25 February 2027, est.: Fourth-quarter report, with Virginia HRM adjusted EBITDA and the pace of repurchases.

What would change the view

The case breaks if Virginia profit keeps sliding while Kentucky stops offsetting it. A second straight year-on-year decline in Virginia HRM adjusted EBITDA at the fourth-quarter report would show the problem is not contained. A return to a monthly Virginia decline above August's 10% would show October was a pause. CDC Gaming used a same-store measure for August and a blended rate for October, so that comparison is approximate.

Fourth-quarter repurchases at or below the third quarter's $48 million would weaken the capital-return part of the case. Net bank leverage above 3.8 times would show the buyback is being funded with more debt. An online casino bill passing the Virginia General Assembly in 2027 would add a new competitor.

On price, a daily close below $88 would give back a large part of the late-October advance and end the thesis.

What it trades with

Virginia risk is specific to this company because CDC Gaming reports that Churchill Downs owns all of the state's HRMs. The monthly state figures therefore read directly on its venues. CDC Gaming's 28 October 2026 headline on Jefferies' view, "Midterm outlook favors Churchill Downs, not Sands", shows one broker separating the name from large casino peers. Results also follow the racing calendar, with the Kentucky Derby making the second quarter the largest for the Live and Historical Racing segment.