Douglass Grissom, a director at Churchill Downs (CHDN), recently bought 10,000 shares. The buy increased his stake by 35%, and came to a total cost of $927,700.
His buy came a few days after two other director buys, both for 2,000 shares at just over $185,000. Going further back, there have been no other insider buys or sells from company executives over the past two years.
Overall, Churchill Downs insiders own 10.2% of the operator of racing venues.
Churchill Downs shares have slid by 32% over the past year. That’s in contrast to their mixed returns, with revenues up 9% but earnings growth off by 5%.
On the valuation side, Churchill Downs trades at 17 times earnings, its lowest valuation over the past two years. The company’s properties, which include the location of the Kentucky Derby, likely carry a premium that may not be reflected in the current valuation.
Action to take: Although shares have been sliding since last fall, Churchill Downs has started to show some signs of traction in recent weeks. Long-term investors may like shares in the $95 range, as shares could grind higher, and the $95 price point has been a strong zone of support.
At current prices, Churchill Downs also pays a 0.4% dividend.
For traders, options are limited, but the September $100 calls, last trading for about $5.60, could see mid-double-digit returns from a further rally in CHDN shares.
Disclosure: The author of this article has no position in the company mentioned here, and does not intend to trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.