Canterbury Park Holding Corp (CPHC) stock intrinsic value fair value estimate & owner earnings analysis

Canterbury Park Holding Corporation runs a horse racetrack and card casino in Shakopee, Minnesota, southwest of Minneapolis, and is developing roughly 140 acres of surrounding land as Canterbury Commons. The card casino, limited by Minnesota law to 80 tables, generated 62.3% of 2025 revenue. The rest comes from pari-mutuel wagering on live and simulcast racing, food and beverage sales ($8.2 million), and admissions, sponsorships and rentals. The main competitor is Mystic Lake, the largest tribal casino in Minnesota, about four miles from the track. How we measure earnings. We start from operating cash flow, remove swings in receivables, payables and similar working-capital items, and subtract stock-based pay, including the shares the company contributes to its 401(k) plan (about $1.6 million in 2025). We then subtract capital spending needed to stay in business. Three items were treated as real costs or excluded rather than left in: (1) the $6.3 million Employee Retention Credit booked in 2021, a one-time pandemic-era item; (2) money advanced to horsepeople to keep purses high ($1.6 million in 2024 and $0.5 million in 2025), which the company records as a receivable that is repayable only if new purse revenue is secured within five years, so we count it as spent; and (3) interest accrued but not yet collected on the Shakopee tax-increment financing receivable ($0.9 million in 2025). On this basis owner earnings per share were about $2.00 in 2021, $1.41 in 2022, $0.02 in 2023, a loss of $1.03 in 2024 and $0.75 in 2025. We use $0.75 a share as the normal level: it is the middle of the five post-pandemic years, and the two extremes roughly offset. 2021 and 2022 were lifted by the reopening rebound, while 2023 and 2024 were pulled down by capital spending of $7.9 million and $12.0 million, the period in which the $15 million barn relocation and redevelopment plan was underway; that plan was substantially completed in 2025. The 2020 pandemic year is excluded. Owner earnings for 2025 were $0.75 per share versus a loss in 2024, so a year-over-year growth rate is not meaningful, and we start the base case at a 2% decline because 2025 revenue fell 3.2% and casino revenue fell 4.4% on stronger competition. Base case, $10.20 per share. Owner earnings drift down 2% a year for ten years from $0.75, then decline 3% a year afterward. Revenue has fallen about 11% from $66.8 million in 2022 to $59.6 million in 2025, and operating costs took 95.9% of revenue in 2025, so we credit no growth. The casino and racetrack have operated since the 1990s and generate cash daily, so we keep the earnings stream running rather than ending it. On top of that we credit two items with a track record. First, the company has received cash from land sales in several recent years ($2.3 million in 2021, $1.2 million in 2022, $8.3 million in 2023), including 37 acres sold for about $8.8 million in 2023 for an amphitheater whose concert season is announced to begin in June 2026; we allow about $0.75 million a year after tax for eight years. Second, the City of Shakopee made its first $582,000 payment on the $20.0 million tax-increment receivable in 2025, and we allow about $0.4 million a year after tax for ten years. Bear case, $3.23 per share. Competition keeps eroding the casino, as it did in 2025, and owner earnings fall 8% a year for ten years, then 5% a year afterward. The company has agreed to reimburse the Doran affiliates that guarantee the loans on its two apartment joint ventures, up to $7.75 million on the Doran Canterbury I loan and up to $2.75 million on the Doran Canterbury II loan, $10.5 million in total or about $2.07 per share. We assume the full amount is paid out. No land sale or tax-increment collection is credited. Bull case, $14.26 per share. Earnings hold at $0.75 for ten years, then decline only 1% a year. First-half 2026 revenue of $29.7 million was 3.0% above the first half of 2025, and the barn redevelopment spending is largely finished. The city's tax-increment payments rise to the roughly $0.9 million a year now being accrued, and land sales run at about $1.5 million a year after tax for eight years. We do not count possible Minnesota sports betting legislation, which has been introduced but not enacted, or repayment of the purse advances. What to watch. About $20 million of the balance sheet is the tax-increment receivable, and collections so far are below the interest accruing on it. The company had $15.8 million of cash, including restricted cash, at the end of 2025 and no borrowings. Its losses on the Doran joint ventures ($5.2 million in 2025) are mostly non-cash depreciation and are added back, but the company keeps lending to those ventures ($1.2 million in 2025), and we have not counted that lending as an operating cost. We give the joint ventures and the remaining undeveloped land no separate value beyond the cash flows above.