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Bull of the Day: Casey's General Stores (CASY)

Madeleine Johnson

Casey’s General Stores, Inc. (CASY) is a convenience store chain that carries a broad selection of food (including freshly prepared foods such as pizza, donuts, and sandwiches), beverages, tobacco products, health and beauty aids, automotive products, and other non-food items. Additionally, Casey’s offers fuel for sale on a self-service basis. The company operates its own distribution centers, delivering approximately 90% of in-store products as well as approximately 75% of the fuel sold at own stores.

Q4 Earnings Impress Wall Street

CASY stock soared over 10% on June 11 after reporting fourth quarter results that beat expectations.

Earnings of 68 cents per share easily surpassed the Zacks Consensus Estimate of 42 cents per share, while revenues of $2.178 billion climbed 4.3% year-over-year. Notably, same-store sales increased 5.7% from the prior-year period.

CEO Terry Handley attributed this recent growth to things like new store openings, gross profit margin expansion, and efficient management of the company’s operating expenses.

"The entire team demonstrated a focused effort to drive the business forward while working diligently to build out new capabilities that will support future earnings growth," Handley said.

Casey’s also launched its new e-commerce site last quarter, as well as implemented a fuel price optimization platform in its stores. And in fiscal 2020, the company has plans to roll out a mobile app and in-store order and price optimization systems.

CASY is On the Move

Since January, shares of CASY have jumped over 26% compared to the S&P 500’s return of roughly 20%.

Caseys General Stores, Inc. Price and Consensus

Earnings estimates have since been rising, and the stock is now a Zacks Rank #1 (Strong Buy).

For the current fiscal year, seven analysts have revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has popped 42 cents during that same time period. 2021 looks pretty strong too, with earnings expected to still remain in positive growth territory.

Looking ahead, Casey’s expects comparable-store fuel sales in the range of a 0.5% decline to a 1% jump, with an improved fuel margin of $0.205 to $0.225 per gallon. Grocery comps growth is expected in the range of 2.5% to 4%, while improved grocery margin should fall between 32% to 33% (up from 31.5% last year).

Thanks to this bullish near-term outlook and soaring sales, the future is looking promising for Casey’s. If you’re an investor searching for a broader retail sector stock to add to your portfolio, make sure to keep CASY on your shortlist.

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