Is Churchill Downs, Inc. overvalued or undervalued?

As of 23 April 2025, the valuation grade for Churchill Downs, Inc. has moved from attractive to very attractive. The company is currently undervalued, with a P/E ratio of 17, which is significantly lower than its peer Live Nation Entertainment, Inc. that has a P/E of 26.95. Additionally, Churchill Downs has an EV to EBITDA ratio of 12.68, compared to Live Nation's 16.96, indicating a more favorable valuation in terms of earnings before interest, taxes, depreciation, and amortization.
Churchill Downs also boasts a strong return on equity (ROE) of 38.85%, which is a notable outlier in the industry, reflecting its effective use of equity capital. The PEG ratio stands at 1.24, suggesting that the stock is reasonably priced relative to its growth rate. Despite a challenging year-to-date performance of -25.24% compared to the S&P 500's 2.44%, the company's strong fundamentals and attractive valuation metrics indicate that it presents a compelling investment opportunity.