Growth expectations for fiscal 2016

Casey’s General Stores (CASY) is expected to register strong earnings growth in the final quarter of its fiscal 2016. The company’s earnings per share (or EPS) are predicted to rise by 16% to reach $1.21 per share in fiscal 4Q16. This would bring its fiscal 2016 EPS to $5.76, reflecting a rise of ~25% over the previous fiscal year.

Fiscal 2017 is expected to be a flat growth year for Casey’s earnings, as EPS are predicted to be ~$5.78. Of the 12 analysts following CASY, 66% have recommended “buys,” and 34% have recommended “holds” on the stock. No analysts have recommended “sells” on the stock.

Analyzing the Valuations of Casey’s and Its Peers

Comparing Casey’s valuations to its peers’

Casey’s is currently trading at a one-year forward earnings multiple of 21.7x, which puts it closer to the upper end of its 52-week PE (price to earnings ratio) range of 16.4x–22.8x. The company’s current valuations are higher than many of its close competitors in the convenience store and supermarket industry.

While CST Brands (CST) has a similar PE of 20x, Murphy USA (MUSA) and Sunoco (SUN) are trading at PEs of 15.4x and 14.3x, respectively. Kroger, the biggest supermarket chain, operates 1,330 fuel stations in the United States and is trading at a PE of 16.2x as of June 2, 2016.

Casey’s next-12-month earnings growth forecast is weak compared to MUSA’s, SUN’s, and KR’s. These three companies, which have lower valuations than CASY, have next-12-month EPS growth forecasts of 32%, 16.7%, and 8.2%, respectively.

The analyst community finds Casey’s stock to be fairly valued and puts a 4% upside potential on its current price of $123.54. The target price for Casey’s stock is $128.25

Investors looking for exposure to Casey’s can invest in the ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL), which has ~1.7% of its holdings invested in the company.

Latest articles

Marathon Petroleum (MPC) stock has been tumbling in Q3, driven by geopolitical tensions, oil price uncertainty, and weaker refining conditions.

This week, AT&T CEO Randall Stephenson noted that AT&T (T) is on track to reduce its leverage multiple to about 2.5x by the end of this year.

Jeff Bezos announced that Amazon had placed an order of 100,000 electric delivery vans from Michigan-based startup Rivian.

Bad news on the trade war front appears to have led to a fall in the broader US equity markets today. Cannabis ETFs were also trading in the red.

Energy Transfer (ET) stock has recovered in the last two trading sessions after investors hammered it on its plans to acquire SemGroup (SEMG).

Software-as-a-service company Datadog (DDOG) made a smashing debut on Wall Street yesterday. After its IPO, DDOG's shares surged 40% in intraday trading.