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What: Shares of iconic racetrack owner Churchill Downs (NAS: CHDN) were galloping ahead today, gaining as much as 11% in intraday trading after the company reported fourth-quarter earnings.
So what: There should be little surprise that Churchill Downs' shares are flying high today. For the fourth quarter, the company grew revenue 9% from a year ago, to $149 million, and reversed a loss to deliver $0.25 in per-share earnings. Wall Street had only estimated that the company would report slightly lower revenue, but the expectation was that Churchill wouldn't report any earnings at all. Of course, the expectation-topping revenue and earnings do need to be taken with a dose of perspective -- the Wall Street estimates came from just a single analyst.
Now what: With an improving economy comes an improving environment for most business, but in particular those in the leisure industry. If the economy continues to improve -- and, maybe more importantly, if consumers start to feel more upbeat -- the good times may keep right on rolling for Churchill's business.
Of course if you ask the company, the strong performance is also a credit to the internal work at Churchill. As CEO Robert Evans noted in the company's press release, shareholder-pleasing outcomes like the strong financial results, the increased dividend, and the pop in the stock price in 2011 were all reflecting "the strategy we have developed and executed over the last several years."
Looking ahead, Evans sounds optimistic that the good times will continue for Churchill as it looks to keep growing in the year ahead. Of course, based on current analysts' profit expectations, it doesn't appear that investors are lacking optimism -- Churchill's stock currently trades at more than 17 times expected 2013 earnings.
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