Is Casey’s General Stores Publicly Traded?

Is Casey’s General Stores Publicly Traded? Yes, Casey’s General Stores trades under the ticker symbol CASY an the NASDAQ. And Shares of the convenience store operator have been showing solid momentum, returning more than 50% over the past year.

The company’s strong top-and bottom-line growth, primarily driven by strategic acquisitions and footprint expansion, has fueled this rally. With the stock trading at a premium to its industry peers, is it wise to invest in it? 

With the U.S. economy holding solid ground, evidenced by increased wage rates and a flourishing labor market, spending on retail and food services in the U.S. rebounded in February, marking 0.6% sequential and 15% year-over-year increases.

As a leading player in the retail sector, Casey’s General Stores, Inc. (NASDAQ:CASY) attracted significant investors’ attention amid the industry tailwinds thanks to its impressive growth story through strategic acquisitions. 

With a market cap of over $11 billion, Casey’s General operates more than 2600 convenience stores in 17 Midwestern states. The company has rapidly expanded its footprint to become the third-largest convenience store and fifth-largest pizza chain in the U.S, so does it still have upside left? 

Store Count Expands Signaling Further Upside

The company’s fiscal 2024 third-quarter earnings report revealed a marginal drop in its top line figure, reaching $3.33 billion, mainly due to the lower retail price of fuel. Meanwhile, EPS of $2.33 surpassed Wall Street estimates despite plunging by 12.7% year over year.

During the third quarter, total fuel gallons sold rose by 6.9% compared to the prior year, primarily due to an increase in store count. However, same-store gallons were nearly flat year-over-year.

The firm suffered from a 10% surge in operating expenses during the third quarter due to operating 167 more stores than the prior year, which accounted for roughly 6% of the total surge.

As of January 31, 2024, store count stood at 2639, compared to 2521 as of April 30, 2023, underscoring management’s dedication to expanding its reach.

Sales & Margins Rise 

Casey’s total inside sales for the quarter were $1.21 billion, representing an impressive 9.5% year-over-year rise, driven by strong performance in the prepared food and dispensed beverage category. Inside gross profit improved by 11.3% from the year-ago value.

As of January 31, 2024, the company’s available liquidity stood at approximately $1.10 billion, consisting of roughly $178 million in cash and cash equivalents on hand and approximately $899 million in available borrowing capacity on existing lines of credit.

Overall, the company’s financials were affected by the challenging environment of rising fuel costs, alongside heightened operational expenses due to a surge in store count, which led to a decline in its bottom-line figure. However, this decline was partly offset by solid profitability inside the store, which favorably supported financials during the quarter. 

For fiscal year 2024, the company foresees same-store sales to increase by 3.5% to 5% and inside margin to improve by approximately 40% to 41%.

EBITDA growth is projected to be 8% to 10%, which aligns with the company’s long-term strategic aim. Management also anticipates buying back at least $100 million in shares throughout the fiscal year.

How Attractive Is Casey’s General Stores’ Dividend?

Apart from its dedication to rewarding shareholders through share repurchases, the company also has an admirable track record of 24 years of consecutive dividend growth.

Casey’s recently declared a quarterly dividend of $0.43 per share, payable to its shareholders on May 15. Its forward annual dividend of $1.72 translates to a 0.56% yield on the prevailing price level.

While the company might not be a classic dividend-paying stock, the company’s financial flexibility and impressive free cash flow generation should help to keep growing its dividend. 

Casey’s General has a conservative dividend payout ratio of 13.28%, which implies that the company is dedicating a bulk of its earnings toward operational growth and can easily sustain its dividend payments.

How Do Analysts Rate Casey’s General Stores Stock?

While the consensus price target of $322.92 indicates modest upside of 5.2%, analysts appear bullish on the stock.

8 out of 14 analysts covering the stock recommend buying it, while the remaining 6 research analysts suggest holding it.

Notably, the company doesn’t have any Sell ratings. 

Is Casey’s General Stores Stock a Buy?

The company has strategically positioned 50% of its stores in rural towns with a population of less than 5,000 people, which makes it more affordable to operate.  

Over the years, the company has increased its brand loyalty by establishing a best-in-class reward platform with 7.7 million active members. Management has made notable investments in technology advancements to achieve greater operational efficiency.

The company’s long-term goal of adding more than 350 additional stores through new buildings and acquisitions as well as a modest dividend payout ratio indicates its focus on growth.  

Given its massive growth potential, Casey’s forward price-to-earnings (P/E) at 24.08x looks reasonable. Considering the company’s estimated EPS growth over the next 3-5 years, the forward non-GAAP PEG stands at 1.87, which is a more than 15% discount to the sector average and more than a 9% discount to the 5-year average. 

The bottom line is that although the company’s financials were not outstanding, considering its growth prospects, unique competitive advantages, reasonable valuation and bullish analyst sentiment still support a bullish position on the stock.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.