Casey's (CASY) Hits Fresh High: Is There Still Room to Run?

Have you been paying attention to shares of Caseys General Stores (CASY)? Shares have been on the move with the stock up 14% over the past month. The stock hit a new 52-week high of $153.54 in the previous session. Caseys General Stores has gained 18.8% since the start of the year compared to the 15.9% move for the Zacks Retail-Wholesale sector and the 17.8% return for the Zacks Retail - Convenience Stores industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on June 10, 2019, Casey's reported EPS of $0.68 versus consensus estimate of $0.42 while it beat the consensus revenue estimate by 2.15%.

For the current fiscal year, Casey's is expected to post earnings of $5.71 per share on $9.74 billion in revenues. This represents a 3.63% change in EPS on a 4.18% change in revenues. For the next fiscal year, the company is expected to earn $6.07 per share on $10.64 billion in revenues. This represents a year-over-year change of 6.33% and 9.19%, respectively.

Valuation Metrics

Casey's may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Casey's has a Value Score of B. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 26.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 12.4X versus its peer group's average of 7.5X. Additionally, the stock has a PEG ratio of 2.66. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Casey's currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Casey's fits the bill. Thus, it seems as though Casey's shares could still be poised for more gains ahead.

How Does Casey's Stack Up to the Competition?

Shares of Casey's have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Ross Stores (ROST), Lithia Motors (LAD), and Dollar General (DG), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 7% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Casey's, even beyond its own solid fundamental situation.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Caseys General Stores, Inc. (CASY) : Free Stock Analysis Report
 
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
 
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
 
Dollar General Corporation (DG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research