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On Tuesday, RBC Capital Markets adjusted its outlook on Casey's General Stores (NASDAQ:CASY) shares, raising the price target marginally to $430 from $428, while maintaining a Sector Perform rating. The research firm's analyst highlighted Casey's General Stores' strong position within the convenience store industry, citing its compelling in-store product mix, consistent growth, and strategic locations as key factors for its valuation, which remains at the higher end of its long-term trading range. With a market capitalization of $14.5 billion and trailing twelve-month revenue of $15 billion, Casey's maintains a healthy gross profit margin of 23.4%. According to InvestingPro analysis, the company currently appears overvalued relative to its Fair Value.
The analyst also noted the potential benefits from the recent Fikes Wholesale acquisition, expressing confidence in Casey's ability to sustain its growth trajectory. The upcoming third fiscal quarter results, scheduled for March 17, 2025, are anticipated to underscore Casey's resilience and appealing market exposure amidst a backdrop of limited consumer spending. InvestingPro data reveals the company has raised its dividend for 25 consecutive years, demonstrating consistent shareholder returns. It was pointed out that the earnings per share (EPS) forecast for the third quarter of fiscal year 2025 has been increased to $2.66, marking a 14.1% year-over-year growth, up from the previous estimate of $2.56. This revision is based on a slight moderation in operating expense growth, current market consensus stands at $2.06, with estimates ranging from $1.72 to $2.66.
The updated EPS estimates take into account recent trends in fuel prices and margins, consumer spending patterns, and costs. However, they do not include contributions from Fikes Wholesale, Inc., whose impact is expected to be detailed with the third quarter results due to be released in mid-March. The Sector Perform rating reflects the relative valuation and upside potential, as per RBC Capital's analysis. InvestingPro subscribers can access 8 additional ProTips and a comprehensive Pro Research Report, which provides deep-dive analysis of Casey's financial health, currently rated as GOOD with a score of 2.96.
Casey's General Stores has been leading its sector, thanks to its attractive in-store offerings, steady expansion, and focus on specific geographic markets. The company's strategic acquisition of Fikes Wholesale is anticipated to further strengthen its market position, although the full effects of this acquisition will only be reflected in the company's financials following the release of the third quarter fiscal results.
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