Here's Why Casey's (CASY) is Staying Ahead of the Curve

Casey's General Stores, Inc. CASY has exhibited a decent run on the bourses in the past six months. Thanks to its operational initiatives — strengthening omni-channel solutions, expanding customer reach and focusing on private-label offerings — the stock has outpaced the Zacks Retail-Convenience Stores industry over time. In the said period, shares of this presently Zacks Rank #3 (Hold) player have risen about 10% compared with the industry’s growth of 5.7%.

Let’s Delve Deeper

Casey's price and product optimization strategies, increased penetration of private brands, and digital engagements comprising mobile app and online ordering capabilities are commendable. This third largest convenience retailer and the fifth largest pizza chain’s self-distribution model, strength in Inside category and acquisition activities also bode well. The same was reflected in third-quarter fiscal 2022 results, wherein both the top and the bottom line grew year over year.

Total revenues of $3,048.7 million surged 51.8% year over year. Revenues grew across all three categories, namely Fuel, Grocery & General Merchandise, and Prepared Food & Dispensed Beverage. We note that Fuel sales surged 77.3% year over year to $1,951.4 million during the quarter.

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Inside sales comprising Grocery & General Merchandise and Prepared Food & Dispensed Beverage jumped 15.4% year over year to $1,025.4 million during the quarter. Inside same-store sales increased 7.6% compared with a 2.1% rise registered in the year-ago period. While Grocery & General Merchandise sales rose 17.3%, Prepared Food & Dispensed Beverage sales rose 10.9% in the quarter.

Casey’s is also deeply focused on pricing and product optimization strategies, cost-containment efforts and distribution efficiency boost. CASY’s breakfast line-up, especially pizzas, is consistently doing well and looks forward to undertaking innovations to accelerate growth in the breakfast category.

CASY’s digital engagements help create a seamless shopping experience and facilitate same-store sales growth. Its digital sales rose 11% in the third quarter. Further, management remains optimistic about Casey's Rewards program that includes 4.6 million members. CASY is also enhancing delivery capabilities via DoorDash and Uber Eats.

The convenience store chain also is steadily expanding its store base to boost sales. Progressing along such lines, Casey's acquired Buchanan Energy, known for its Bucky’s Convenience Stores and 48 Circle-K stores, primarily in Oklahoma City. The Buchanan Energy transaction included 92 retail locations (24 stores in Nebraska, 56 in Illinois, five in Iowa, three in Missouri and four in Texas) and a dealer network of 81 stores.

Casey's continues to envision same-store fuel and inside sales to rise in mid-single-digit percentages for fiscal 2022. However, higher operating expenses remain a matter of concern.

3 Stocks Looking Red Hot

Here we highlight three better-ranked stocks, namely, Target TGT, Kroger KR and Tractor Supply Company TSCO.

General merchandise retailer Target currently sports a Zacks Rank #1 (Strong Buy). TGT has an expected EPS growth rate of 16.5% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the corresponding year-ago period’s levels. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.

Kroger, the renowned grocery retailer, carries a Zacks Rank of 2 (Buy) at present. KR has an expected EPS growth rate of 9.9% for three-five years.

The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 2.4% and 1.9%, respectively, from the year-ago reported number. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #2 at present. TSCO has an expected EPS growth rate of 9.8% for three-five years.

The Zacks Consensus Estimate for Tractor Supply Company’s current financial-year sales and EPS suggests growth of 8.1% and 8.9%, respectively, from the corresponding year-ago period’s actuals. TSCO has a trailing four-quarter earnings surprise of 22%, on average.

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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.