In trying to determine the current valuation of Churchill Downs Incorporated (NasdaqGS:CHDN) shares, we note that the Book to Market ratio of the shares stands at 0.153565. It’s commonly accepted that a Book to Market ratio greater than one indicates that the shares might be undervalued. The book to market ratio has some limitations in certain industries however where intangible assets (such as knowledge) often are not represented on a balance sheet. The ratio is calculated by dividing the market price per share by book value per share.

As earnings season winds down, investors may be analyzing the numbers and trying to decide what to do next. Investors may be choosing to buy companies that have a proven track record of solid earnings growth. Other investors may be looking to spot the diamonds in the rough that haven’t necessarily broken out yet. It may be wise to research companies that continually string together superior quarters. One great quarter or one horrible quarter may not provide enough information to justify either a buy or a sell. Many investors will look deeper into the numbers for companies that produce much wider surprise factors than expected. This may occur on either end of the dial with a beat or a miss. Earnings reports also have the ability to cause severe stock price fluctuations. Some traders will look to catch some profits while others may stay on the bench until the dust has cleared.

Churchill Downs Incorporated (NasdaqGS:CHDN) presently has a current ratio of 0.57. The current ratio, also known as the working capital ratio, is a liquidity ratio that displays the proportion of current assets of a business relative to the current liabilities. The ratio is simply calculated by dividing current liabilities by current assets. The ratio may be used to provide an idea of the ability of a certain company to pay back its liabilities with assets. Typically, the higher the current ratio the better, as the company may be more capable of paying back its obligations.

**Return on Assets**

There are many different tools to determine whether a company is profitable or not. One of the most popular ratios is the “Return on Assets” (aka ROA). This score indicates how profitable a company is relative to its total assets. The Return on Assets for Churchill Downs Incorporated (NasdaqGS:CHDN) is 0.062323. This number is calculated by dividing net income after tax by the company’s total assets. A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

Churchill Downs Incorporated (NasdaqGS:CHDN)’s Leverage Ratio was recently noted as 0.489488. This ratio is calculated by dividing total debt by total assets plus total assets previous year, divided by two. The leverage of a company is relative to the amount of debt on the balance sheet. This ratio is often viewed as one measure of the financial health of a firm.

**ERP5 Rank**

The ERP5 Rank is an investment tool that analysts use to discover undervalued companies. The ERP5 looks at the Price to Book ratio, Earnings Yield, ROIC and 5 year average ROIC. The ERP5 of Churchill Downs Incorporated (NasdaqGS:CHDN) is 8945. The lower the ERP5 rank, the more undervalued a company is thought to be.

**FCF Yield 5yr Avg**

The FCF Yield 5yr Average is calculated by taking the five year average free cash flow of a company, and dividing it by the current enterprise value. Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The average FCF of a company is determined by looking at the cash generated by operations of the company. The Free Cash Flow Yield 5 Year Average of Churchill Downs Incorporated (NasdaqGS:CHDN) is 0.024812.

Ever wonder how investors predict positive share price momentum? The Cross SMA 50/200, also known as the “Golden Cross” is the fifty day moving average divided by the two hundred day moving average. The SMA 50/200 for Churchill Downs Incorporated (NasdaqGS:CHDN) is currently 1.20110. If the Golden Cross is greater than 1, then the 50 day moving average is above the 200 day moving average – indicating a positive share price momentum. If the Golden Cross is less than 1, then the 50 day moving average is below the 200 day moving average, indicating that the price might drop.

**Magic Formula**

The MF Rank (aka the Magic Formula) is a formula that pinpoints a valuable company trading at a good price. The formula is calculated by looking at companies that have a high earnings yield as well as a high return on invested capital. The MF Rank of Churchill Downs Incorporated (NasdaqGS:CHDN) is 7859. A company with a low rank is considered a good company to invest in. The Magic Formula was introduced in a book written by Joel Greenblatt, entitled, “The Little Book that Beats the Market”.

Stock volatility is a percentage that indicates whether a stock is a desirable purchase. Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year. The Volatility 12m of Churchill Downs Incorporated (NasdaqGS:CHDN) is 19.139000. This is calculated by taking weekly log normal returns and standard deviation of the share price over one year annualized. The lower the number, a company is thought to have low volatility. The Volatility 3m is a similar percentage determined by the daily log normal returns and standard deviation of the share price over 3 months. The Volatility 3m of Churchill Downs Incorporated (NasdaqGS:CHDN) is 25.965500. The Volatility 6m is the same, except measured over the course of six months. The Volatility 6m is 22.015800.

**Yield**

After a recent scan, we can see that Churchill Downs Incorporated (NasdaqGS:CHDN) has a Shareholder Yield of 0.068391 and a Shareholder Yield (Mebane Faber) of 0.01834. The first value is calculated by adding the dividend yield to the percentage of repurchased shares. The second value adds in the net debt repaid yield to the calculation. Shareholder yield has the ability to show how much money the firm is giving back to shareholders via a few different avenues. Companies may issue new shares and buy back their own shares. This may occur at the same time. Investors may also use shareholder yield to gauge a baseline rate of return.

Stock market investing can sometimes become highly emotional. Being able to leave emotions out of the major investing decisions might be tricky, but it may end up being a portfolio savior down the road. Nobody wants to see a thoroughly researched stock pick underperform. Holding onto the hope that a certain stock has to bounce back may lead to later problems. Of course, it can be very hard for humans to admit when a mistake was made. Finding the ability to detach from a position can be tough. Humans make mistakes, but being able to learn from those mistakes moving forward can help with achieving long term success in the market.

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