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Run for the Roses: Breakout Experts Buys Churchill Downs
06/13/2019 5:00 am EST
Churchill Downs operates casinos in seven states and has a mobile and online platform for betting on horse racing in the U.S. It has four racetracks: Churchill Downs Racetrack, Arlington International Race Course, Fair Grounds Race Course and Calder Race Course.
Its TwinSpires operates mobile and online wagering It is a platform for betting on horse racing. It also has United Tote and Capital View Casino & Resort Joint Venture.
The stock recently surged higher, breaking out from its 6-week, cup-and-handle base. The move carries the stock to a new all-time high. That is bullish.
The stock formed a cup and handle base and broke out in April, but then faded back. The stock regrouped and formed a flat base.
The recent breakout comes with a widening of the daily spread and expanding volume. That is bullish. The stock's momentum indicator is also strongly bullish. CHDN also had a 3-for-1 stock split earlier this year.
This year, analysts are forecasting a 21% gain in net to $4.40 a share from the $3.64 the year before. The stock sells with a price-earnings ratio of 24. We see that as reasonable.
Quarterly earnings growth will show an acceleration. Net for the second quarter is expected to rise 18% to $3.03 a share from the $2.57 the year before. The highest estimate on the Street is at $3.20 a share.
We see good chances for an upside earnings surprise. The company beat the consensus the past five quarters. Net for the third quarter is expected to surge 70% to 90 cents a share from the 53 cents the year before.
Going out to 2020, the Street predicts a 15% gain in net to $5.08 a share from the anticipated $4.40 this year. We are targeting the stock for a run to $134 per share within the next few months, or sooner. A protective stop can be placed near the $101 level.
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