On Thursday, RBC Capital Markets adjusted its stock price target for Casey's General Stores (NASDAQ:CASY), increasing it to $403 from the previous $393 while maintaining a Sector Perform rating on the stock. The convenience store chain's financial performance has been robust in the first quarter of fiscal year 2025, with earnings per share (EPS) climbing 7% year-over-year to $4.83.
This figure surpassed the consensus estimate of $4.52 by approximately 7%, with the outperformance largely attributed to the fuel segment, which saw better-than-expected gallon sales and consumer packaged goods (CPG) margins.
The company's internal operations also demonstrated efficiency, with inside store gross profit, excluding "other" categories, aligning with forecasts. Moreover, same-store operational expenditure growth was effectively managed, showing a minimal increase of 0.7%.
At this stage, Casey's has not provided an update to its fiscal year 2025 guidance on key performance indicators, as it awaits the completion of the Fikes acquisition, expected later in calendar year 2024.
In light of the positive earnings results, RBC Capital has raised its EPS forecasts for Casey's by 3% for fiscal years 2025 and 2026. The new price target of $403, which marks a $10 increase, reflects the firm's assessment of Casey's relative valuation and the implied upside potential for the stock. The Sector Perform rating indicates that the analyst views the stock as likely to perform in line with the sector average in the near future.
In other recent news, Casey's General Stores has seen a mix of financial outcomes and strategic moves. The company reported first fiscal quarter earnings per share (EPS) of $4.83, surpassing Goldman Sachs (NYSE:GS) and FactSet consensus estimates. This performance was attributed to strong fuel margins and controlled operating expense growth.
Despite the positive earnings surprise, Casey's management has not updated its fiscal year 2025 guidance, anticipating the completion of the Fikes transaction.
Casey's General Stores also plans to significantly expand its footprint, aiming to add 500 new stores by the end of fiscal year 2026. Evercore ISI has increased its price target for Casey's shares to $435, citing an expected increase in EBITDA and a subsequent rise in leverage. The firm also highlighted the company's strategic focus on quality prepared meals.
Casey's is set to acquire Fikes Wholesale, Inc., owner of CEFCO Convenience Stores, for $1.145 billion. This acquisition will add 198 retail stores and a dealer network to Casey's operations, expanding its presence into Texas and the southern states of Alabama, Florida, and Mississippi. The transaction, expected to close in the fourth quarter of 2024, is anticipated to be accretive to the company's EBITDA in the current fiscal year.
Meanwhile, BMO Capital has increased the stock price target for Casey's to $400, maintaining a Market Perform rating. The new price target reflects a valuation of 26-27 times the price-to-earnings (P/E) ratio or 13 times the enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). The revision comes after Casey's demonstrated its robust business model in its fiscal fourth quarter 2024 and fiscal year 2025 guidance.
InvestingPro Insights
Casey's General Stores (NASDAQ:CASY) has demonstrated a commitment to shareholder returns, having raised its dividend for 24 consecutive years, a testament to its financial stability and investor-friendly policies. This is particularly notable given that the company's P/E ratio stands at 26.12, suggesting a premium valuation relative to near-term earnings growth. Investors should be aware that three analysts have revised their earnings forecasts downwards for the upcoming period, which could indicate potential headwinds or a more conservative outlook on the company's financial performance.
Despite the recent adjustments in earnings expectations, Casey's has maintained a moderate level of debt and remains profitable over the last twelve months, with a gross profit margin of 22.53%. Moreover, the company's revenue growth on a quarterly basis for Q4 2024 was 8.15%, signaling a positive trajectory in its core business operations. With a market capitalization of $13.16B and a fair value estimate of $313.76 according to InvestingPro, the company's stock price reflects a strong return over the last decade, including a year-to-date price total return of 29.58% as of the latest data.
For investors looking for more detailed analysis, there are additional InvestingPro Tips available on the platform, which could further inform investment decisions regarding Casey's General Stores.
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