Why Casey's Unique Business Model Is A Game-Changer In The C-Store Industry: Analyst Opines

Raymond James analyst Bobby Griffin reiterated a Market Perform rating on the shares of Casey's General Stores Inc CASY after 1Q FY24 earnings.

EPS of $4.52 was above the analyst's $3.21 estimate and the consensus. Operating income of $234 million was above the analyst's $173 million estimate, driven by higher fuel gross profit and modestly lower operating expenses.

The analyst said that August fuel margins were in the high 30 CPG range, while same-store gallons were slightly below the mid-point of management's -1% to +1% annual guidance range.

The analyst noted the management left the majority of its guidance elements unchanged. The only change is management now anticipates adding at least 150 stores in FY24 versus its prior outlook of 110 stores, noted the analyst.

The analyst changed the 2Q EBITDA estimate to $270 million from $272 million, FY24 EBITDA to $990 million from $925 million, and FY25 estimate to $1,067 million from $1,044 million.

The analyst observed that Casey's business model remains unique versus other industry participants given its small-town focus, large food business, and growing customer loyalty.

According to the analyst, there remains a nice multi-year runway for unit growth (organic and tuck-in M&A), given the fragmented nature of the C-Store industry. 

Price Action: CASY shares are trading higher by 3.04% at $274.20 on the last check Wednesday.

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