Casey's (CASY) Stock Offers a Compelling Investment Choice
Casey's General Stores, Inc. CASY has demonstrated remarkable strength in the stock market, exhibiting commendable performance over the past six months. Headquartered in Ankeny, Iowa, the company's stock has experienced a decent 15.6% increase during this period, in tandem with the industry. This success can be attributed to a variety of factors, including its diverse product offerings, expansion into new markets and successful integration of digital technologies.
Capitalizing on its extensive store network, Casey's has effectively met customer demands. Through the strategic use of technology, the company has established stronger connections with its customer base. This includes the development of user-friendly mobile apps for convenient ordering and the implementation of innovative loyalty programs. These initiatives not only enhance customer engagement but also fortify Casey's position in the market.
The stock's appealing Value Score of B adds to its attractiveness, signaling positive prospects for potential appreciation. As a Zacks Rank #1 (Strong Buy) company, Casey's has emerged as a compelling contender, thanks to a combination of strategic measures and a promising valuation. Investors may find the stock's steady performance and proactive approach in the market a noteworthy opportunity for consideration.
The Driving Factors
Casey's price and product optimization strategies, increased penetration of private brands and digital engagements comprising the mobile app and online ordering capabilities are commendable. As the third-largest convenience retailer and the fifth-largest pizza chain, its distinctive self-distribution model, robust Inside category performance and strategic acquisitions are noteworthy strengths.
In the second quarter of fiscal 2024, Inside sales, which include Grocery & General Merchandise and Prepared Food & Dispensed Beverage, increased 6.2% to reach $1,346.9 million. Inside same-store sales also witnessed a noteworthy rise of 2.9% during the quarter. This was driven by a stellar performance in the prepared food and dispensed beverage category, including whole pizza pies, bakery and dispensed beverages as well as non-alcoholic and alcoholic beverages in the grocery and general merchandise category.
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Grocery & General Merchandise sales experienced a 5.2% increase, reaching $964.4 million, while Prepared Food & Dispensed Beverage sales grew 8.9% to $382.5 million during the quarter.
Casey’s focus on technology advancements, merchandise ordering efficiency, inventory management and data analytics positions it well for future growth. The company has been strengthening pizza promotions for guests seeking meal solutions, along with enhancing breakfast lineups. Casey’s Rewards, the company's flagship loyalty program boasting a membership of more than 7.3 million, has proven to be a vital tool for guest engagement.
Strategic Vision and Outlook
With a strategic vision to expand, Casey's aims to add more than 300 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.
Casey's estimates a promising Inside same-store sales increase of 3.5% to 5% in fiscal 2024, with a targeted Inside margin range of 40%-41%. The projected EBITDA growth aligns with the long-term strategic target of 8-10%, reflecting a healthy financial outlook.
Wrapping Up
Casey's has not only demonstrated stability and success in the stock market over the past six months but also strategically positioned itself for sustained growth. With a compelling business model, a commitment to digitalization and expansion plans, Casey's emerges as a noteworthy and attractive long-term investment choice for discerning investors.
3 More Stocks Looking Red Hot
Here, we have highlighted three other top-ranked stocks, namely Ingredion Incorporated INGR, Sysco Corporation SYY and Ollie's Bargain OLLI.
Ingredion Incorporated, which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, holds a Zacks Rank #2 (Buy). INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.
Sysco Corporation, a food and related products company, currently carries a Zacks Rank #2. SYY delivered a back-to-back positive earnings surprise in the past two quarters.
The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.
Ollie's Bargain, America’s largest retailer of closeout merchandise and excess inventory, currently carries a Zacks Rank #2. Ollie's Bargain has a trailing four-quarter earnings surprise of 7%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings suggests growth of 14.9% and 74.7%, respectively, from the year-ago reported numbers.
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Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
