Casey's (CASY) Shares Up 19.7% YTD: What's Driving the Stock?
Shares of Casey's General Stores, Inc. CASY have rallied 19.7% so far this year. The company’s business operating model, price and product optimization strategies, omnichannel capabilities, enhanced customer reach and private-label offerings seem to have boosted sentiments for the stock.
The Ankeny, IA-based company belongs to the Zacks Retail - Convenience Stores industry, which comes under the ambit of the Zacks Retail-Wholesale sector.
Casey's has a $10 billion market capitalization and currently carries a Zacks Rank #2 (Buy).
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Year-to-date, the company’s shares have outperformed the industry’s growth of 18.8%. The S&P 500 has risen by 14%, while the sector increased by 10.9% during the same period.
Catalysts Behind the Share Price Increase
Casey’s' focus on technological advancements, merchandise ordering efficiency and inventory management with data analytics positions it well for future growth. The company has been strengthening pizza promotions for customers seeking meal solutions and enhancing breakfast lineups. It has been increasing the penetration of private brands. CASY currently offers nearly 350 items under its private brand and remains confident of adding over 40 new items in the remainder of the calendar year.
The company aims to broaden its private label offerings further, capitalizing on a selection of more than 300 premium, budget-friendly snacks and beverages carefully tailored to meet the desires and preferences of customers.
In first-quarter fiscal 2024, Casey’s' Inside sales jumped 8.1% to $1,369.7 million and Inside same-store sales increased by 5.4%. The impressive performance was driven by strength in the prepared food and dispensed beverage category, including whole pizza pies, hot sandwiches and donuts, as well as non-alcoholic and alcoholic beverages, snacks and candy in the grocery and general merchandise categories.
Casey’s' business model, diversified product offerings, expansion of its footprint and digitization endeavors will likely support future sales. Its strategic focus on price and product optimization, along with efforts to contain costs and improve distribution efficiency, is expected to drive sales and expand profit margins. Casey’s anticipates Inside same-store sales to increase between 3% and 5% in fiscal 2024. It expects to maintain an Inside margin in the range of 40%-41%, promising a healthy financial outlook.
The company’s shareholder-friendly policies through dividend payouts and share repurchases also work in its favor. For instance, in the fiscal first quarter, it paid dividends of $14.9 million and repurchased shares worth $30 million. Exiting the fiscal first quarter, it had $370 million remaining under its existing share repurchase authorization.
With a strategic vision to expand, CASY aims to add 350 stores by the end of fiscal 2026, ensuring that each store is strategically positioned and stocked with the right products to meet customer demands. This growth strategy seamlessly blends organic expansion and strategic acquisitions.
Other Stocks to Consider
Here, we have highlighted three other top-ranked stocks, namely Ross Stores ROST, Celsius Holdings CELH and Walmart WMT.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings indicates growth of 7.1% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 100% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 88.9% and 170.3%, respectively, from the year-ago reported numbers.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings implies growth of 5% and 2.2%, respectively, from the year-ago reported numbers.
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Walmart Inc. (WMT) : Free Stock Analysis Report
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
Celsius Holdings Inc. (CELH) : Free Stock Analysis Report
