Churchill Downs Beats on the Top Line

Churchill Downs (Nasdaq: CHDN  ) reported earnings on March 12. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Churchill Downs met expectations on revenue and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded and GAAP earnings per share improved. The non-GAAP profit was a surprise, as analysts had predicted a loss.

Gross margin dropped, operating margin increased, and net margin improved.

Revenue details
Churchill Downs logged revenue of $149.3 million. The one analyst polled by S&P Capital IQ expected sales of $148.7 million on the same basis. GAAP reported sales were 14% lower than the prior-year quarter's $174.0 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.25. The one earnings estimate compiled by S&P Capital IQ predicted -$0.01 per share on the same basis. GAAP EPS were $0.44 for Q4 compared to -$0.11 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 17.8%, 8,450 basis points worse than the prior-year quarter. Operating margin was 4.2%, 570 basis points better than the prior-year quarter. Net margin was 5.1%, 620 basis points better than the prior-year quarter.

Looking ahead
On the bottom line, the average EPS estimate is -$0.15.

Next year's average estimate for revenue is $704.9 million. The average EPS estimate is $3.05.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 53 members out of 74 rating the stock outperform, and 21 members rating it underperform. Among 27 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 20 give Churchill Downs a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Churchill Downs is buy, with an average price target of $70.50.

Over the decades, small-cap stocks like Churchill Downs have provided market-beating returns, provided they're value-priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

• Add Churchill Downs to My Watchlist.