Casey's General Stores, Inc. (CASY), a leading convenience store operator, is scheduled to report its fourth-quarter financial results on June 11, 2024, after market close. Analysts expect the company’s EPS and revenue for the quarter (ended April 2024) to increase 15.3% and 4.3% year-over-year to $1.72 and $3.47 billion, respectively.
Moreover, CASY has an impressive earnings surprise history, having topped the consensus EPS estimates in three of the trailing four quarters.
During the last reported third quarter, Casey's inside same-store sales increased 4.1% compared to the previous year and 9.9% on a two-year stack basis. The company’s total inside gross profit rose 11.3% year-over-year to $501.5 million.
Darren Rebelez, Chairman, President, and CEO, commented, "Casey's delivered another solid quarter highlighted by inside gross profit growth. Inside same-store sales were driven by prepared food and dispensed beverage, with whole pies and hot sandwiches performing exceptionally well.
He added, “The operations team performed exceptionally well this quarter integrating multiple acquisitions, reducing same-store labor hours while growing sales and driving positive guest satisfaction scores."
During the quarter, the Board of Directors approved a quarterly dividend of $0.43 per share. The dividend was paid on May 15, 2024, to shareholders of record on May 1, 2024. It also repurchased nearly $30 million of shares, and now the company has approximately $310 million remaining under its existing share repurchase authorization.
The company advanced its product offerings in May with the launch of an all-new BBQ Pulled Pork Pizza with slow-smoked pulled pork – it’s like a summer BBQ, now on a pizza that exemplifies the unexpected food innovation the company delivers to its customers, emphasizing fresh ingredients and bold flavors from a convenience store.
Casey also launched a new brand campaign highlighting the contemporary convenience, crave-able food, and personalized guest experience the brand is known for across its 17-state footprint - "It’s Not Crazy, It’s Casey’s." This enabled the brand to stand out in the increasingly personalized, guest-centric, and digital-forward convenience store category.
CASY reaffirmed its annual outlook, with same-store inside sales expected to increase from 3.5% to 5%. It expects inside margin improvement to approximately 40% to 41%. The fiscal year 2024 EBITDA growth is expected to be in line with the long-term strategic plan's goal of 8% to 10%. The company is anticipated to add at least 150 stores in fiscal 2024.
Shares of CASY have surged 19.6% over the past six months and 51% over the past year to close its last trading session at $328.63.
Let’s look at factors that could influence CASY’s performance in the upcoming months.
Robust Financials
CASY reported a total revenue of $11.26 billion during the nine months that ended January 31, 2024. Its income before income taxes grew 5.6% from the year-ago value to $543.97 million. The company’s net income of $414.95 million and $11.09 indicate growth of 6.2% and 6.4% from the prior year’s period, respectively.
In addition, the company’s adjusted EBITDA came in at $841.26 million, up 6.2% from the prior year’s period.
Also, Casey’s total assets stood at $6.21 billion as of January 31, 2024, compared to $5.94 billion as of April 30, 2023. A strengthened asset base may positively impact the company’s financial health and ability to pursue future growth opportunities.
Solid Historical Growth
CASY’s revenue and EBITDA have grown at respective CAGRs of 22.6% and 10.7% over the past three years. The company’s EBIT has increased 12.2% over the same timeframe, while its net income and EPS have improved at CAGRs of 12.2% and 12%, respectively.
Also, the company’s tangible book value and total assets have grown at CAGRs of 9.9% and 12.2% over the past three years, respectively.
Favorable Analyst Estimates
Analysts expect CASY’s revenue for the fourth quarter (ended April 2024) to increase 4.3% year-over-year to $3.47 billion. The consensus EPS estimate of $1.72 for the same quarter reflects a 15.3% year-over-year improvement. For the fiscal year ending April 2024, CASY’s EPS is expected to grow 7.7% year-over-year to $12.83.
Additionally, Street expects the company’s revenue and EPS for the fiscal year 2025 to increase 6.3% and 8.3% year-over-year to $15.69 billion and $13.90, respectively.
High Profitability
CASY’s trailing-12-month ROCE of 16.96% is 52.3% higher than the industry average of 11.13%. Its trailing-12-month ROTC of 9.61% is considerably higher than the industry average of 6.89%.
Furthermore, the stock’s trailing-12-month ROTA of 7.59% favorably compares to the industry average of 4.59%. Similarly, its trailing-12-month CAPEX/Sales of 3.43% is 4.1% higher than the industry average of 3.30%.
POWR Ratings Reflect Promise
CASY’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. CASY has a B grade for Quality, in sync with its higher-than-industry profitability.
CASY is ranked #18 in the 36-stock A-rated Grocery/Big Box Retailers industry.
Beyond what I have stated above, we have also given CASY grades for Sentiment, Value, Momentum, Growth, and Stability. Get access to all the CASY Ratings here.
Bottom Line
CASY is due to report its financial results for the fourth quarter and full year 2024 on June 11. Analysts appear bullish about the company’s growth prospects, driven by robust demand for its quality and diverse product offerings, new innovative offerings, store footprint expansion, and strong market position.
Moreover, convenience stores tend to perform well during economic uncertainty as consumers prioritize essential purchases. Casey’s focus on providing everyday necessities positions it well to withstand economic downturns.
Given CASY’s solid financials, accelerating profitability, and promising growth outlook, this stock could be an ideal buy now.
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While CASY has an overall POWR Rating of B, investors could also check out these other stocks within the A-rated Grocery/Big Box Retailers industry with A (Strong Buy) or B (Buy) ratings: Empire Company Limited (EMLAF), Marks & Spencer Group Plc (MAKSY), and Village Super Market, Inc. (VLGEA)
For exploring more A and B-rated retail stocks, click here.
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CASY shares were trading at $326.64 per share on Monday morning, down $1.99 (-0.61%). Year-to-date, CASY has gained 19.24%, versus a 12.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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