NEW YORK ( TheStreet) -- Churchill Downs Incorporated (Nasdaq: CHDN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 63.3% when compared to the same quarter one year prior, rising from -$8.67 million to -$3.19 million.
  • CHURCHILL DOWNS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CHURCHILL DOWNS INC increased its bottom line by earning $1.28 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($2.07 versus $1.28).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CHDN's very impressive revenue growth greatly exceeded the industry average of 0.9%. Since the same quarter one year prior, revenues leaped by 54.5%. Growth in the company's revenue appears to have helped boost the earnings per share.

Churchill Downs Incorporated owns and operates pari-mutuel wagering properties and businesses in the United States. It offers gaming products through its slot and video poker operations in Louisiana and Florida. The company has a P/E ratio of 26.3, below the average leisure industry P/E ratio of 41.9 and above the S&P 500 P/E ratio of 17.7. Churchill Downs has a market cap of $735 million and is part of the services sector and leisure industry. Shares are up 1.8% year to date as of the close of trading on Thursday.

You can view the full Churchill Downs Ratings Report or get investment ideas from our investment research center.

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