On Tuesday, RBC Capital Markets adjusted its outlook on shares of Casey's General Stores (NASDAQ:CASY), increasing the price target to $428 from the previous $403, while maintaining a Sector Perform rating.
This adjustment comes in the wake of Casey's General Stores delivering second-quarter financial results that surpassed consensus estimates for both earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS). According to InvestingPro data, Casey's stock has delivered an impressive 53% return year-to-date, though it currently trades at a relatively high P/E ratio of 30.4x.
The convenience store chain's recent performance has been attributed to several key factors. The analyst praised Casey's for its effective operational execution and solid market positioning. These factors have contributed to the company's ability to justify its valuation premium.
The premium reflects a mix of positive attributes, including an attractive product mix within its stores, consistent unit growth, strategic geographic concentration, robust control over operating expenses, and benefits stemming from the recent acquisition of Fikes Wholesale, Inc., which was completed on November 1.
With annual revenue of nearly $15 billion and an overall "GREAT" financial health score on InvestingPro, Casey's demonstrates strong operational fundamentals.
Following the better-than-expected fiscal second-quarter results, RBC Capital has raised its EPS forecasts for Casey's by 3 to 4.5% for fiscal years 2025 and 2026. The updated price target of $428 represents an increase of $25. The Sector Perform rating indicates that the firm views the stock's valuation as being in line with the expected performance relative to the sector.
The report further elaborates on Casey's General Stores' advantageous positioning, particularly in lower-cost geographies and small markets, which supports the investment thesis. The company's strategic focus on these areas has been a driving force behind its successful performance and is expected to continue to play a crucial role in its growth trajectory.
In other recent news, Casey's General Stores has outperformed Q2 earnings estimates. The company reported an adjusted earnings per share of $4.85, exceeding the anticipated $4.30. However, its revenue of $3.95 billion fell slightly short of the predicted $4.06 billion.
Casey's General Stores experienced a 4.0% increase in same-store sales compared to the previous year, largely due to strong performance in prepared food and beverages. The company also noted a rise in its inside margin to 42.2% from 41.1% a year ago.
In light of its recent acquisition of Fikes Wholesale, Casey's updated its fiscal 2025 outlook, expecting an EBITDA increase of at least 10% for the full year. The company also maintains a 3-5% growth forecast in inside same-store sales and plans to add approximately 270 new stores by fiscal 2025.
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