When I checked up on Churchill Downs (NASDAQ:CHDN) last summer, I questioned whether it had enough speed in its step to meet analysts' full-year earnings expectations of $1.75 per share. As it turns out, selling a piece of property for $254.6 million goes a long way toward beating the oddsmakers.

For fiscal 2005, the company earned $5.86 per share, well surpassing the year-ago mark of $0.67. Even excluding the sale of the property, the company was able to earn $0.96 a share. The sale of the Hollywood Park property benefits Churchill Downs in two ways. First, it has allowed the enterprise to virtually eliminate its long-term debt, which now stands at roughly $15 million, according to management remarks in the conference call. Second, the company can now concentrate on areas where it sees the greatest growth potential.

Revenue growth for 2005 was solid, rising 13.2% year over year. Management described the year as "challenging" but remains encouraged by its growth, better-than-average customer satisfaction polls, and its ability to strengthen the balance sheet despite an abnormally high year for natural disasters. Hurricanes and a tornado caused three significant casualty losses for Churchill Downs, though all losses were fully insured. On top of this, the year got off to a slow start as record rainfalls inundated California. In the face of these challenges, management highlighted its flagship Churchill Downs track in Kentucky as a significant reason for its growth.

Heading into 2006, business seems brisker year over year, thanks largely to California. In the year ahead, the company will continue to concentrate on high-growth areas such as international wagering. It will also examine its remaining underperforming assets to "develop alternative uses for the excess real estate." The company hopes to establish a year-round "property utilization plan" to take advantage of the off-season.

Churchill Downs seems to have a sound strategy in place to increase growth, but I'd want to wait until the company has proven itself before recommending it for an investor's portfolio. A new growth initiative is fine, but results will truly get my attention. With its stock sitting at roughly the same level as it was in 1998, Churchill Downs will need to develop a track record of market-beating performance before Foolish investors put a wager down.

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Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.