Churchill Downs Inc

Where It Passes

Where It Falls Short

• Debt & Leverage0% pass✗ 15▾

  All 12 investors flag CHDN's debt & leverage

  LT Debt vs Net Current AssetsLT Debt $4.1B vs NCA $-904.0M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 3.42, IC: 2.7x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity3.42

  ✗Lynch< 0.33

  Cash - Long-term Debt$-3.9B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change66.58% -> 67.70%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.32

  ✗Dreman> 1.5✗SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity3.42

  ✗Dreman< 0.8✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Debt Levels3.42

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=2.7x, D/EBITDA=4.7x

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity3.42

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-3.4242; #3975/4210 (top 94.4%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation8% pass✓ 2✗ 26▾

  12 of 13 flag CHDN's valuation — Graham, Lynch, Greenblatt +9 more

  Net income / market capitalization+6.66%; #1249/6340 (top 19.7%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Price / 3-yr avg EPS18.2x

  ✗Graham<= 15x

  Price-to-Book Ratio6.9x

  ✗Graham<= 1.5x

  P/E x P/B125.00

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value6.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.7%, ROC=30.6%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)9.0x

  ✗Dreman< 8x

  Price / Book Value per Share6.9x

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessOE Yield=8.9%

  ✓MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=6.9x

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-21.1% (IV=$82.35 vs Price=$99.72)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low131% of trailing low ($76.16)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Positive book equity / market capitalization+0.2017; #4176/6449 (top 64.8%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+0.4396; #2805/5247 (top 53.5%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+13.99%; #1638/6202 (top 26.4%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Verdicts15% pass✓ 2✗ 11▾

  Split decision: 10 FAIL · 4 NEUTRAL · 2 PASS

  Overall verdict

  ✗GrahamFAIL (1/9)✗BuffettFAIL (3/9)✗LynchFAIL (2/7)✗GreenblattRank #706•PiotroskiNEUTRAL (F-Score 6)✗DremanFAIL (3/11)✓MungerPASS (2/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (2/5)✓AckmanPASS (5/9)✗TempletonFAIL (3/8)•SleepNEUTRAL (4/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (2/6)✗SchlossFAIL (2/7)•OshaughnessyNEUTRAL (Not ranked)
• Growth25% pass✓ 5✗ 8▾

  6 of 8 flag CHDN's growth — Graham, Lynch, Dreman +3 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: -11.3% vs Rev: 4.2%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency25/26 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth11.1%

  ✓Ackman>= 5%

  Positive EPS Growth Frequency

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 22.9% -> 23.4%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR22.7%

  ✓SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency25% pass✓ 3✗ 8▾

  6 of 8 flag CHDN's efficiency — Graham, Buffett, Dreman +3 more

  Current Ratio0.32

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)8.6%

  ✗Buffett> 10%

  ROIC - WACC-1.4%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)30.6%

  ✓Greenblatt> 25%

  Current Ratio Change YoY0.57 -> 0.60

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.38x -> 0.39x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities0.32

  ✗Dreman> 1.5

  Return on Invested Capital9.9%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=7.8%; FY2024: ROIC=9.3%; FY2025: ROIC=8.8%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC9.2% (RR=93% x ROIC=9.9%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 8.8%)

  ✗SleepROIC > 12% in a majority of years
• Valuation models25% pass✓ 1✗ 3▾

  Models split on CHDN at $99.72 — fair values range $60.45–$118.96

  Greenblatt fair value$73.93

  ✗Greenblatt-34.9% margin vs $99.72

  Dreman fair value$82.35

  ✗Dreman-21.1% margin vs $99.72

  Pabrai fair value$118.96

  ✓Pabrai+16.2% margin vs $99.72

  Akre fair value$60.45

  ✗Akre-65.0% margin vs $99.72
• Profitability31% pass✓ 18✗ 17▾

  11 of 16 flag CHDN's profitability — Graham, Buffett, Lynch +8 more

  Net income / market capitalization+6.66%; #1249/6340 (top 19.7%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive EPS (10 years)23/27 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)25/27 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)57.0%

  ✓Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)23.4% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$386.8M

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE33.0%

  ✓Lynch> 15%

  EBIT / Enterprise Value6.7%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=6.7%, ROC=30.6%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets5.12%

  ✓PiotroskiROA > 0

  ROA Change YoY5.87% -> 5.12% (delta: -0.75%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=10.29%, ROA=5.12%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue21.1%

  ✓Dreman>= 8%

  Net Income / Shareholders' Equity33.0%

  ✓Dreman> 12%

  Margin of SafetyP/B=6.9x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity41.3% (3-yr avg)

  ✓AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-21.1% (IV=$82.35 vs Price=$99.72)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency25/26 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue25.5%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity33.0%

  ✓Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend22.9% (2023) -> 23.4% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendrevenue up, operating margin 22.9% -> 23.4%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+33.02%; #390/5226 (top 7.5%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0113; #909/5884 (top 15.4%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years7/8 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Cash Flow40% pass✓ 5✗ 7▾

  6 of 10 flag CHDN's cash flow — Lynch, Dreman, Pabrai +3 more

  Free Cash Flow Proxy$386.8M

  ✓BuffettPositive and growing

  FCF Positive and Growing$168.2M

  ✗LynchPositive and growing

  Operating Cash Flow$769.8M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=10.29%, ROA=5.12%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)9.0x

  ✗Dreman< 8x

  P/E or FCF Yield

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive8/12 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap

  ✗Ackman>= 4%

  Price / FCF per Share

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency25/25 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures

  ✗Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section