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Casey's (CASY) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Casey's General Stores (CASY - Free Report) ? Shares have been on the move with the stock up 5.4% over the past month. The stock hit a new 52-week high of $175.18 in the previous session. Casey's General Stores has gained 36.3% since the start of the year compared to the 23.1% move for the Zacks Retail-Wholesale sector and the 34.3% return for the Zacks Retail - Convenience Stores industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 9, 2019, Casey's reported EPS of $2.31 versus consensus estimate of $2.05 while it beat the consensus revenue estimate by 0.82%.

For the current fiscal year, Casey's is expected to post earnings of $6.31 per share on $9.96 billion in revenues. This represents a 14.52% change in EPS on a 6.44% change in revenues. For the next fiscal year, the company is expected to earn $6.74 per share on $10.64 billion in revenues. This represents a year-over-year change of 6.81% and 6.86%, respectively.

Valuation Metrics

Casey's may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Casey's has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 27.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.3X versus its peer group's average of 7.8X. Additionally, the stock has a PEG ratio of 3.04. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Casey's currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Casey's meets the list of requirements. Thus, it seems as though Casey's shares could have a bit more room to run in the near term.

How Does Casey's Stack Up to the Competition?

Shares of Casey's have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Burlington Stores (BURL - Free Report) , Costco Wholesale (COST - Free Report) , and O'Reilly Automotive (ORLY - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 40% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Casey's, even beyond its own solid fundamental situation.

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