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Churchill Downs Announces $500M Share Repurchase Program; Shares Gain 2.2%
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Churchill Downs Announces $500M Share Repurchase Program; Shares Gain 2.2%

The Board of Churchill Downs Inc. (CHDN) has approved a $500 million share repurchase program. Following the announcement, shares of the company jumped 2.2% in extended trade on Wednesday and closed at $243.80.

Based out of Kentucky, the company’s offerings include horseracing, online wagering and casino gaming. (See Churchill Downs stock chart on TipRanks)

The new share repurchase plan replaces the earlier $300 million plan that was approved in October 2018. As of September 29, 2021, the old plan had the unused authorization of $97.9 million, and the new plan includes this unspent amount.

Under the new program, which has no time limit, Churchill Downs’ management will repurchase shares via privately negotiated transactions or in the open market.

The CEO of Churchill Downs, Bill Carstanjen, said, “Today’s authorization of a new share repurchase program reflects our Board of Directors’ confidence in CHDN’s strong free cash flow and our ability to deliver long-term growth for our investors.”

“We are excited about the future growth potential for each of our businesses and remain committed to creating long-term shareholder return through our unique pipeline of organic investments, accretive transactions, share repurchases, and annual dividends,” Carstanjen added.

Two months ago, Jefferies analyst David Katz maintained a Buy rating on the stock and increased the price target to $254 from $244 (6.5% upside potential).

Following the announcement of the company’s second-quarter financial results, the analyst said, “Growth in Kentucky and Illinois are specific to Churchill Downs, but the recent weakness in the shares suggests investors are finding reasons not to reflect the company’s considerable growth prospects in the stock’s valuation.”

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys. The average Churchill Downs price target of $254.50 implies 6.7% upside potential. Shares have gained 45.6% over the past year.

According to TipRanks’ Smart Score rating system, Churchill Downs scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.

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