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Here's Why Casey's (CASY) Stock Seems a Lucrative Pick

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Casey's General Stores, Inc. (CASY - Free Report) appears robust, thanks to its sturdy business strategies. CASY’s price and product optimization strategies, increased penetration of private brands and digital capabilities are commendable. The company’s focus on technology advancements, merchandise ordering efficiency, inventory management along with data analytics position it well for future growth.

Let’s Dive Deep

Casey's digital engagements comprising mobile app and online ordering capabilities help create a seamless shopping experience and facilitate same-store sales growth. The company’s mobile app now represents 66% of all digital revenues. CASY’s price and product optimization strategy, cost-containment efforts, distribution efficiency and capital reallocation plan should help augment sales and drive growth.

Further, management remains optimistic about Casey's Rewards program which exceeded 5.8 million members. The company is also enhancing delivery capabilities via DoorDash and Uber Eats. Casey’s also utilizes Door Dash white label delivery, a third-party service that takes orders through its systems. The company continues to utilize its own delivery drivers and offers in-store and curbside pickup.

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Casey’s has also been strengthening pizza promotions for guests who are seeking meal solutions as well as enhancing breakfast lineups. It has also been increasing the penetration of private brands. It currently offers more than 250 items under its private brand, with a long-term goal of 10%. Casey’s has completed the acquisition of Buchanan Energy, known for its Bucky’s Convenience Stores, Circle K and Pilot Corporation. We note that the company expects to make an investment of roughly $450-$500 million in property and equipment in fiscal 2023.

Casey’s has a strong brick-and-mortar footprint. During fiscal 2022, Casey's constructed 21 new stores, acquired 207 stores and closed 20 stores. Management anticipates adding approximately 80 stores in fiscal 2023 and  to exceed the stated three-year commitment of 345 units. The acquisition of Buchanan Energy added more than 90 retail stores and 80 dealer sites to Casey's business. The company also acquired 48 Circle-K stores primarily in Oklahoma City as well as 40 Pilot stores primarily in Knoxville, TN market. These stores are driving the company’s sales and overall profitability.

What’s More?

Shares of this renowned convenience store chain have gained 9.7% in the past three months compared with the industry’s 5.5% growth. A VGM Score of A further speaks volumes for this presently Zacks Rank #2 (Buy) stock.

The Zacks Consensus Estimate for CASY’s fiscal 2023 sales and earnings per share (EPS) is currently pegged at $16.04 billion and $10.51, respectively. These estimates suggest growth of 23.8% and 15.5%, respectively, from the year-ago fiscal quarter’s corresponding figures. The Zacks Consensus Estimate for EPS of $10.51 for fiscal 2023 and $9.73 for fiscal 2024, suggests growth of 3.1% and 1.8%, respectively. This reflects analysts’ optimism about the stock.
In a nutshell, Casey’s is likely to perform impressively on bourses given the above-discussed tailwinds.

Solid Picks in Retail

We highlighted three better-ranked stocks, namely Tecnoglass (TGLS - Free Report) , Wingstop (WING - Free Report) and Capri Holdings (CPRI - Free Report) .

Tecnoglass manufactures and sells architectural glass and windows, and aluminum products for the residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tecnoglass’ next financial-year sales and EPS suggests growth of 111.2% and 9%, respectively, from the year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.

Wingstop, which franchises and operates restaurants, currently holds a Zacks Rank of 2. The company has a trailing four-quarter earnings surprise of 5.8%, on average.

The Zacks Consensus Estimate for Wingstop’s next financial-year sales and EPS suggests growth of 18.4% and 16.1%, respectively, from the year-ago reported numbers. WING has an expected EPS growth rate of 12% for three-five years.

Capri Holdings, a global fashion luxury group of iconic brands like Versace, Jimmy Choo and Michael Kors, carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for Capri Holdings’ current financial-year sales and EPS suggests growth of 0.9% and 10.6%, respectively, from the corresponding year-ago tallies. CPRI has a trailing four-quarter earnings surprise of 21%, on average.

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