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Casey’s Compared to Its Peers: A Valuations Summary

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Sep. 5 2016, Updated 7:04 a.m. ET

Valuations summary

In this part of the series, we’ll look at Casey’s General Stores’ (CASY) current valuation and its earnings potential in the near term. We’ll also evaluate where CASY stands in terms of valuations compared to its peers and its own past multiples.

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Casey’s current valuation

Casey’s is currently trading at a one-year forward earnings multiple of 22x. It’s operating close to the upper end of its one-year forward PE (price-to-earnings) range of 17.4x–23.1x.

Despite moving to the higher side of its valuations, the company is still reasonably priced compared to peer CST Brands (CST), which is trading at 27.8x.

Murphy USA (MUSA), which operates a chain of retail gas stations in the proximity of Walmart (WMT) stores, is cheaper than CST and CASY. It’s trading at 14.9x.

Kroger (KR), the largest supermarket in the United States with 1,330 fuel stations, is valued lower than Casey’s. It’s currently operating at one-year forward PE multiple of 14.3x.

Growth expectations for fiscal 2017

Casey’s has witnessed strong growth in the last two fiscal years. Its EPS (earnings per share) increased by 34% in fiscal 2015 followed by a 24% growth in fiscal 2016. However, for fiscal 2017, it’s expected to report a slowdown. Wall Street has predicted fiscal 2017 EPS to increase by around 4% to $5.94.

The first quarter is predicted to be the fastest growth quarter of fiscal 2017 for Casey’s. Earnings are likely to improve 15% YoY (year-over-year) to $1.97 per share. The second quarter has been predicted to be the weakest, with a likely decline in EPS of 12%. Earnings are likely to gain momentum in the third quarter, increasing an expected 11%, followed by a 9% expected increase in the fourth quarter.

Investors looking for exposure to Casey’s through ETFs can invest in the First Trust Consumer Staples AlphaDEX ETF (FXG). CASY makes up 3.3% of FXG.

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