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Here's Why Casey's (CASY) Stock Appears Promising Right Now

Zacks Equity Research

Casey’s General Stores, Inc. CASY is benefitting from solid growth in fuel gross profit dollars, store openings and continuous focus on improving operating efficiencies. Moreover, its impressive earnings surprise record, which was maintained in second-quarter fiscal 2020, is noteworthy. Notably, the second quarter marked the company’s sixth straight quarter of recording positive earnings surprise.

Driven by such upsides, the Zacks Rank #2 (Buy) stock has rallied 26.6% in a year, outperforming the industry’s growth of 25%. Also, analysts are growing bullish on the stock. Evidently, the Zacks Consensus Estimate for the company’s fiscal 2020 earnings has been revised 1.1% upward over the past 60 days. Further, its VGM Score of A and long-term earnings growth rate of 9.1% reflect its inherent strength.

That said, let’s delve into factors that make it well-positioned for sustaining its momentum in 2020.

 

 

A Brief Introspection

Casey’s is on track with its Value Creation Plan, comprising fleet card program, price and product optimization, loyalty program, digital engagements, cost-containment efforts and capital-reallocation plan. Such cost-reduction initiatives are likely to result in savings of $200 million in store-level operating expenditure by fiscal 2021. Moreover, 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 drive fuel sales.

Coming to price optimization, the strategy is anticipated to help augment sales and fuel margin. During the second quarter of fiscal 2020, fuel margin of 22.9 cents per gallon increased 14.5% year over year. Management now envisions fuel margin of 21-23 cents per gallon for fiscal 2020, whereas it reported 20.3 cents in fiscal 2019. Casey's had earlier forecast fuel margin of 20.5-22.5 cents per gallon for fiscal 2020.

Apart from this, the company launched the e-commerce website, Caseys.com, last year, rolled out mobile app and initiated fuel price optimization platform across all outlets. Also, it launched its first-ever loyalty program, wherein customers can gain points from everyday purchases and redeem the same for fuel discounts, Casey’s Cash or donate to a local school. In addition to this, the company is making efforts in the digital space to help create a seamless online as well as in-store shopping experience and facilitate same-store sales growth.

Summing Up

All said, we hope that Casey’s well chalked out endeavors will help it keep its solid show on.

3 Other Stocks to Consider

Target Corp. TGT presently has a long-term earnings growth rate of 7.6% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boot Barn Holdings BOOT currently has a long-term earnings growth rate of 17% and a Zacks Rank #2.

Best Buy Co., Inc BBY has a long-term earnings growth rate of 8.7% and a Zacks Rank #2 at present.

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