Casey’s General Stores target lifted to $438 by RBC Capital

On Wednesday, RBC Capital Markets adjusted its price target for Casey’s General Stores (NASDAQ:CASY), raising it to $438 from the previous $430, while maintaining a Sector Perform rating on the stock. The firm’s analyst, Irene Nattel, provided insights into the company’s recent financial performance and strategic positioning. According to InvestingPro data, the stock currently trades at a P/E ratio of 27.67, suggesting a premium valuation relative to near-term earnings growth. Analyst targets range from $295 to $500, reflecting diverse market opinions.

Nattel highlighted Casey’s General Stores’ solid financial results for the third fiscal quarter, noting that key performance indicators (KPIs) aligned with RBC Capital Markets’ expectations. The company has demonstrated strong financial health, with InvestingPro reporting $15 billion in revenue over the last twelve months and a healthy gross profit margin of 23.4%. The quarter also marked the first full period of contributions from the acquisition of Buchanan Energy and its Bucky’s Convenience Stores, collectively referred to as Fikes in the analyst’s comments.

The earnings per share (EPS) for the quarter came in at $2.33, surpassing the consensus by 11%. However, Nattel pointed out that forecasts for the quarter were somewhat uneven, especially concerning the integration of Fikes.

Casey’s General Stores’ valuation premium was attributed to several factors, including an attractive in-store product mix, consistent unit growth, a focus on lower-cost geographies and small markets, strong operational expense control, and the potential upside from the recent acquisition. These elements contribute to the company’s unique market position. Notable strengths include a 36-year track record of consistent dividend payments, with a recent dividend growth of 16.3%. InvestingPro analysis indicates the stock is currently trading above its Fair Value, with 8 additional exclusive insights available to subscribers.

The updated price target to $438 is based on a roll-forward to mid-fiscal year 2027, with the Sector Perform rating reflecting the stock’s relative valuation and implied upside. Nattel’s commentary underscores the company’s ongoing efforts to leverage its strategic advantages and the expected benefits from its recent expansion.

In other recent news, Casey’s General Stores reported impressive first-quarter results for 2025, surpassing analysts’ expectations. The company achieved earnings per share (EPS) of $2.33, exceeding the projected $2.03, and recorded revenue of $3.9 billion, which was higher than the anticipated $3.76 billion. Notably, inside sales saw a significant increase of 15.3%, driven by strong performance in prepared food and energy drinks. The company also benefited from a reduced effective tax rate of 19.2%, down from 24.1% the previous year, which contributed to enhanced profitability.

Casey’s strategic initiatives, including the integration of recent acquisitions, have played a crucial role in maintaining its operational efficiency and growth trajectory. The company has successfully integrated the largest transaction in its history, contributing to a 17.3% year-over-year increase in total revenue. Analysts have noted that the acquisition of Sykes was EBITDA dilutive in the short term due to integration costs but is expected to be modestly positive in the coming quarters.

Looking ahead, Casey’s has updated its fiscal year 2025 guidance, projecting an 11% increase in EBITDA and plans for $500 million in property and equipment purchases. This growth is supported by the company’s strategic focus on expanding its food business and accelerating unit growth. Additionally, analysts from firms such as Wells Fargo (NYSE:WFC) and Melius Research have engaged with Casey’s management on the company’s strategic direction, highlighting the potential for further growth and synergies in the coming years.

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