Speedway Motorsports (TRK) & Churchill Downs (CHDN) Critical Survey

Speedway Motorsports (NYSE: TRK) and Churchill Downs (NASDAQ:CHDN) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, dividends, profitability, valuation, institutional ownership and earnings.

Institutional & Insider Ownership

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23.4% of Speedway Motorsports shares are held by institutional investors. Comparatively, 83.7% of Churchill Downs shares are held by institutional investors. 72.0% of Speedway Motorsports shares are held by insiders. Comparatively, 13.8% of Churchill Downs shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Speedway Motorsports has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, Churchill Downs has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Dividends

Speedway Motorsports pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Churchill Downs pays an annual dividend of $1.52 per share and has a dividend yield of 0.6%. Speedway Motorsports pays out 65.9% of its earnings in the form of a dividend. Churchill Downs pays out 25.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a summary of current ratings and target prices for Speedway Motorsports and Churchill Downs, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Speedway Motorsports 0 1 0 0 2.00
Churchill Downs 0 2 1 0 2.33

Churchill Downs has a consensus target price of $244.67, suggesting a potential upside of 2.46%. Given Churchill Downs’ stronger consensus rating and higher probable upside, analysts clearly believe Churchill Downs is more favorable than Speedway Motorsports.

Profitability

This table compares Speedway Motorsports and Churchill Downs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Speedway Motorsports 31.30% 4.48% 2.52%
Churchill Downs 11.47% 16.80% 4.66%

Valuation and Earnings

This table compares Speedway Motorsports and Churchill Downs’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Speedway Motorsports $453.59 million 1.56 $148.24 million $0.91 18.95
Churchill Downs $882.60 million 3.65 $140.50 million $5.88 40.61

Speedway Motorsports has higher earnings, but lower revenue than Churchill Downs. Speedway Motorsports is trading at a lower price-to-earnings ratio than Churchill Downs, indicating that it is currently the more affordable of the two stocks.

Summary

Churchill Downs beats Speedway Motorsports on 11 of the 15 factors compared between the two stocks.

About Speedway Motorsports

Speedway Motorsports, Inc., through its subsidiaries, promotes, markets, and sponsors motorsports activities in the United States. The company owns and operates eight racing facilities, including Atlanta Motor Speedway, Bristol Motor Speedway, Charlotte Motor Speedway, Kentucky Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway, Sonoma Raceway, and Texas Motor Speedway racing facilities. As of December 31, 2017, its racing facilities included total seating capacity of approximately 715,000 with 754 luxury suites. The company also provides souvenir merchandising, including screen-printing and embroidery, as well as food, beverage, and hospitality catering services; and radio programming, production, and distribution services. In addition, it manufactures and distributes modified racing cars and parts; produces and sells micro-lubricant; distributes, wholesales, and retails motorsports and other sports-related souvenir merchandise and apparel; leases oil and gas mineral rights; and rents office, warehouse, and industrial park space, as well as track rentals for motorsports and non-motorsports events and activities, and driving schools. The company was founded in 1959 and is headquartered in Concord, North Carolina. Speedway Motorsports Inc. is a subsidiary of Sonic Financial Corporation.

About Churchill Downs

Churchill Downs Incorporated is a racing, gaming and online entertainment company. The Company is engaged in brick-and-mortar casino gaming with approximately 9,030 gaming positions in seven states, and is a legal mobile and online platform for betting on horseracing in the United States. It operates through five segments: Racing, Casinos, TwinSpires, Other Investments and Corporate. Racing includes four racetracks: Churchill Downs Racetrack, Arlington International Race Course, Fair Grounds Race Course and Calder Race Course. Casinos is a provider of brick-and-mortar real-money casino gaming. TwinSpires operates mobile and online wagering business, which is a platform for betting on horseracing. Other Investments includes United Tote and Capital View Casino & Resort Joint Venture (Capital View).

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