On Wednesday, Goldman Sachs maintained its Neutral stance on shares of Casey's General Stores (NASDAQ:CASY), with a consistent price target of $360.00. After attending the company's Investor Day in Ankeny, Iowa, the firm's analyst noted Casey's General Stores' progress on its strategic objectives, which were initially set the previous year.
The management team did not provide an updated long-term algorithm for the Fikes acquisition but reiterated their strategic goals. These objectives aim to achieve top quintile EBITDA growth of 8-10% through fiscal year 2026. This growth is expected to be driven by an acceleration of the company's food business, ongoing new unit growth, and enhanced operational efficiencies.
During the event, the analyst had the opportunity to tour a Casey's store and distribution center, where they observed the management's strong execution in a challenging market. The progress made on all three pillars of the strategic plan was noted, and the management team's efforts to operate as a smarter, faster, and more agile company compared to the previous year were highlighted.
The analyst expressed a positive view of the company's growth opportunities, including the success of its prepared foods business, potential gains from private label brands, operational efficiencies, and sustained competitive advantages in self-distribution.
Despite the positive aspects observed, Goldman Sachs believes that the current stock price reflects these growth opportunities. The analyst cited a balanced risk-reward scenario as the reason for maintaining the Neutral rating on Casey's General Stores. The company's strategic plan's focus areas are aimed at continuing their trajectory of growth and efficiency, with the management team demonstrating commitment to these goals during the Investor Day showcase.
In other recent news, Casey's General Stores has seen a steady increase in key financial metrics for the first quarter of fiscal year 2025. Diluted earnings per share rose by 7% to $4.83, while net income increased by 6% to $180 million. EBITDA also saw a 9% improvement, reaching $346 million. In-store sales grew by 2.3%, with fuel same-store gallons sold witnessing a slight increase of 0.7%.
Evercore ISI has raised Casey's share target from $435 to $440, maintaining an Outperform rating on the stock. The firm's adjustment follows an Investor Day event that provided insights into Casey's strategies for achieving its EBITDA growth target of 8-10%. Casey's is also considering small to mid-sized mergers and acquisitions, which could contribute to a 4% unit growth.
However, JPMorgan downgraded Casey's stock from Neutral to Underweight, citing rising cheese costs as a potential impact on the company's Prepared Foods margins. Despite this, Casey's has shown resilience in its merchandise business and has managed to control costs effectively. The company also recently announced its acquisition of Fikes, including 198 CEFCO convenience stores, as part of its growth strategy.
InvestingPro Insights
Casey's General Stores' (NASDAQ:CASY) strategic objectives and growth plans, as discussed in the Goldman Sachs analysis, are reflected in several key financial metrics and insights from InvestingPro. The company's market capitalization stands at $14.45 billion, indicating its significant presence in the convenience store sector.
InvestingPro data shows that Casey's has maintained strong financial performance, with a revenue of $15.09 billion in the last twelve months as of Q1 2023. The company's revenue growth of 4.01% during this period aligns with management's focus on top-line expansion. Moreover, the EBITDA growth of 14.16% over the same period suggests that Casey's is successfully improving its operational efficiency, a key component of its strategic plan.
Two relevant InvestingPro Tips highlight Casey's financial strength and shareholder-friendly policies:
1. Casey's has raised its dividend for 25 consecutive years, demonstrating a commitment to returning value to shareholders.
2. The company has been profitable over the last twelve months, supporting its growth initiatives and dividend policy.
These insights complement the Goldman Sachs analysis, providing additional context to Casey's financial health and strategic execution. For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide further insights into Casey's General Stores' investment potential.
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