On Wednesday, RBC (TSX:RY) Capital Markets adjusted its financial outlook for Casey's General Stores (NASDAQ:CASY), increasing the price target to $361 from the previous $322. The firm maintained a Sector Perform rating on the stock. This adjustment comes after the company reported a strong finish to Fiscal Year 2024, with fourth-quarter earnings per share (EPS) of $2.34, marking a 57% year-over-year increase and surpassing the consensus estimate of $1.72 by approximately 36%.
The company's robust performance was attributed in part to its fuel segment, which contributed to around 68% of the earnings outperformance, driven by higher than anticipated gallons sold and consumer packaged goods (CPG) margins. Additionally, the gross profit within the stores, excluding other income, was approximately 2.5% higher than forecasted. The sequential stability in same-store operating expenses growth was noted at 2.6%.
In response to the positive financial results, Casey's General Stores announced a 16% increase in its dividend. Furthermore, the company provided guidance for Fiscal Year 2025 that aligns with the key performance indicators (KPIs) set out in their three-year plan presented at the Investor Event in June 2023.
Following this announcement, RBC Capital has raised its EPS forecasts for the company by 7% for Fiscal Year 2025 and by 4% for Fiscal Year 2026. The updated price target of $361 reflects the analyst's view on the relative valuation and the implied upside potential for the stock.
In other recent news, Casey's General Stores has reported a 13% decrease in diluted earnings per share (EPS) to $2.33 for the third quarter of fiscal year 2024. Despite this, the company experienced a rise in same-store sales for prepared food and dispensed beverages by 7.5%, and grocery and general merchandise sales by 2.8%.
Analysts from Evercore ISI maintain a positive outlook on Casey's, reaffirming an Outperform rating with a steady price target of $370.00, while BMO (TSX:BMO) Capital Markets and RBC Capital Markets have assigned a "Market Perform" and "Sector Perform" rating respectively. The company plans to add 350 stores by the end of fiscal 2026, indicating a strong growth trajectory.
Casey's General Stores is also expanding its board of directors with the addition of Maria Castañón Moats, effective July 1, 2024.
InvestingPro Insights
Casey's General Stores (NASDAQ:CASY) has demonstrated a strong track record of rewarding shareholders, as highlighted by the fact that it has raised its dividend for 24 consecutive years. This consistent increase aligns with the recent announcement of a 16% dividend hike following their impressive fourth-quarter performance. Moreover, with a market capitalization of $12.09 billion and a P/E ratio of 25.91, the company is positioned as a significant player in the retail sector. While some analysts have revised their earnings downwards for the upcoming period, it's important to note that Casey's has maintained its dividend payments for 35 consecutive years, showcasing its commitment to long-term shareholder returns.
Investment in Casey's comes with considerations, as the company is trading at a high P/E ratio relative to near-term earnings growth, and its short-term obligations exceed its liquid assets. However, with analysts predicting profitability this year and a solid performance over the last decade, investors may find the company's outlook promising. For those interested in deeper analysis, there are additional InvestingPro Tips available, including insights on debt levels and return metrics. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for further valuable investment guidance. With 9 more tips awaiting on InvestingPro, investors can make a well-informed decision on Casey's General Stores.
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