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Casey's (CASY) Stock Hits 52-Week High: What's Driving It?

Zacks Equity Research

Casey's General Stores, Inc. CASY touched a 52-week high of $172.86, before closing the session a tad lower at $171.98 on Aug 19. Notably, the company is benefiting from its Value Creation Plan. This includes new fleet card program, price and product optimization, digital engagements comprising mobile app and online ordering capabilities, cost containment efforts as well as capital reallocation plan.

Driven by these upsides, shares of this Ankeny, IA-based company have rallied approximately 29% in the past three months, outperforming the industry’s growth of 25.7%.

Further, investors can’t ignore the stock’s VGM Score of A, which is a testament to its sound fundamentals. Let’s take a closer look at the aspects driving this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.



Casey's Growth Story

Casey's remains on track with its Value Creation Plan to improve sales and profitability. Also, management is focusing on improving distribution efficiency. Casey’s cost-reduction initiatives are likely to result in savings of approximately $200 million in store-level operating expenditures by fiscal 2021.

The company launched the new Casey’s.com e-commerce website, initiated fuel price optimization platform across all outlets and will soon launch enhanced mobile app. At the end of fiscal 2019, the new fleet card program has more than 2,000 active cards and 500 new accounts.

In addition, Casey's fleet card program, which involves managing and monitoring of initial sales, back-end system processing, billing and other consumer-oriented services, is likely to lift fuel sales. The company’s digitalization efforts will help create a seamless shopping experience online as well as in-store, and facilitate same-store sales growth.

Further, the company’s price and product optimization strategy will help augment sales and margin. It projects fuel margin of 20.5-22.5 cents per gallon for fiscal 2020. It reported fuel margin of 20.3 cents in fiscal 2019.

Management envisions fiscal 2020 grocery and other merchandise same-store sales to increase 2.5-4%, with margin expected between 32% and 33%. Also, prepared food and fountain same-store sales are anticipated to increase 3-6%, with margin between 61% and 63% for fiscal 2020.

Apart from these, the company is on track with its store expansion. During fiscal 2018, the company opened 85 new outlets, acquired 26 stores, completed 30 replacements, and remodeled 74 stores. In fiscal 2019, it constructed 56 new stores and acquired 24. It closed 10 stores. The company replaced eight stores and has eight acquisition stores under agreement to purchase. Moreover, it plans to construct 60 and acquire 25 stores in fiscal 2020.

All said, we are optimistic that Casey’s growth plans will help keep its stellar show on.

3 Other Stocks to Watch

Crocs CROX had a long-term earnings growth rate of 15% in the last reported quarter. It currently carries a Zacks Rank #1.

Columbia Sportswear COLM has a long-term earnings growth rate of 11.2% and a Zacks Rank #2 (Buy).

Deckers Outdoor Corporation DECK has a long-term earnings growth rate of 12.1% and a Zacks Rank #2 at present.

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