Have you been paying attention to shares of Casey's General Stores (CASY)? Shares have been on the move with the stock up 6.6% over the past month. The stock hit a new 52-week high of $401.17 in the previous session. Casey's General Stores has gained 45.8% since the start of the year compared to the 21.1% move for the Zacks Retail-Wholesale sector and the 45.8% 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 4, 2024, Casey's reported EPS of $4.83 versus consensus estimate of $4.54 while it missed the consensus revenue estimate by 0.34%.
For the current fiscal year, Casey's is expected to post earnings of $14.01 per share on $16.4 billion in revenues. This represents a 4.32% change in EPS on a 10.37% change in revenues. For the next fiscal year, the company is expected to earn $15.48 per share on $18 billion in revenues. This represents a year-over-year change of 10.5% and 9.75%, 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 A. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 28.6X current fiscal year EPS estimates, which is not in-line with the peer industry average of 28.6X. On a trailing cash flow basis, the stock currently trades at 17.4X versus its peer group's average of 17.4X. 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 #2 (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 fits the bill. Thus, it seems as though Casey's shares could have potential in the weeks and months to come.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
