On Thursday, Goldman Sachs adjusted its price target for Casey's General Stores (NASDAQ:CASY) shares, increasing it to $335 from the previous $280, while keeping a Neutral rating on the stock.
The firm acknowledged Casey's General Stores' strong performance in the fourth fiscal quarter of 2023, noting a significant year-over-year earnings per share (EPS) increase of 56% to $2.34. This beat was attributed to robust sales both in-store and at the gas pumps, which helped to mitigate slightly higher than anticipated operating expenses.
The company's management was praised for its execution during a tough and ever-changing business landscape, achieving approximately 13% growth in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fiscal year 2024. This performance exceeded both the guidance and the company's long-term strategic plan, which projected growth of 8% to 10%.
Goldman Sachs also highlighted the company's momentum at the close of FY24, which seems to have extended into the first quarter of FY25. Casey's reported May fuel margins in the low-40 cents per gallon range and growth in in-store sales and fuel volume that align with the company's expectations.
The analyst's commentary underscored Casey's ability to effectively manage fuel volumes and margins amidst a volatile wholesale environment, hinting at the sustainability of strong fuel margins.
However, the firm also noted the potential challenges Casey's may face due to the fluctuating costs and fuel market, coupled with the ongoing uncertainty surrounding consumer health. These factors contribute to an unpredictable outlook.
Despite the positive results and the increased price target, Goldman Sachs believes the current stock valuation reflects a balanced risk/reward scenario, leading to the decision to maintain a Neutral stance on the shares.
In other recent news, Casey's General Stores has been the focus of multiple analyst upgrades following a strong performance in the fourth quarter of the fiscal year 2024.
Wells Fargo, Deutsche Bank, and Benchmark have raised their price targets for the company's shares to $415, $420, and $410 respectively, maintaining positive ratings on the stock. Casey's General Stores reported a 57% increase in earnings per share for the fourth quarter, significantly surpassing the $1.70 estimate with an actual figure of $2.34.
The company's net income for the year was a notable $502 million, and it achieved $1.1 billion in EBITDA, an 11% increase compared to the prior year. In addition to its strong financial performance, Casey's General Stores plans to add at least 100 stores in fiscal 2025 through mergers, acquisitions, and new store constructions. The company's rewards program, boasting over 8 million members, also plans to enhance one-to-one marketing efforts.
While the company has expressed some caution due to potential concerns about consumer spending and modest price increases in response to inflation, recent developments indicate a commitment to continued growth.
The company's successful strategies, including new unit growth, an expanded food service menu, and cost containment measures, have been highlighted by analysts from Benchmark, Wells Fargo, and Deutsche Bank. These recent developments suggest that Casey's General Stores is positioned to continue its positive performance in the upcoming fiscal year.
InvestingPro Insights
Goldman Sachs' revised price target for Casey's General Stores (NASDAQ:CASY) aligns with the company's recent financial achievements and forward momentum. In light of this, InvestingPro data and tips provide additional context for investors considering this stock. Casey's General Stores has demonstrated a strong track record, raising its dividend for an impressive 24 consecutive years, which speaks volumes about its financial health and commitment to shareholders. This is complemented by a notable return over the past week, with a 16.6% price total return, indicating significant investor confidence.
On the financial metrics front, Casey's boasts a stable market capitalization of $14.11 billion, and while the P/E ratio is currently not applicable, the adjusted P/E ratio for the last twelve months as of Q4 2024 stands at 28.11. Furthermore, the company operates with a moderate level of debt, which is an encouraging sign for investors concerned with long-term sustainability. It's also worth noting that while analysts have revised their earnings downwards for the upcoming period, the company's performance has remained profitable over the last year, with a 73.8% price total return.
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