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Casey's (CASY) Expands Horizons Through Operational Efforts

Casey's General Stores, Inc. CASY has been strengthening its place in the industry through a resilient business operating model, stellar omnichannel capabilities, expanded customer outreach and exclusive private-label offerings. Driven by an unwavering commitment to guest-centered convenience and restaurant-quality food, Casey's endeavors to carve out a unique niche in the market.

Decoding Casey's Strategies

Casey's shines brightly in the retail landscape, thanks to its ingenious pricing and product optimization strategies, successful expansion of private brands and adept digital engagement through mobile apps and online ordering systems. Ranked as the third-largest convenience retailer and the fifth-largest pizza chain in the United States, Casey's self-distribution strategy, strong performance in the Inside category and strategic acquisitions indicate a promising future.

Casey’s focus on technology advancements, merchandise ordering efficiency, inventory management and data analytics positions it well for future growth. The company has been strengthening pizza promotions for guests seeking meal solutions, along with enhancing breakfast lineups. Casey’s Rewards, the company's flagship loyalty program, has proven to be a vital tool for guest engagement.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

A Glimpse of Casey's Success

In the third quarter of fiscal 2024, Casey's demonstrated strength with a surge in Inside sales. The metric grew 9.5% year over year to nearly $1,215 million during the quarter. The growth was not just quantitative but qualitative as well, with Inside same-store sales witnessing an increase of 4.1%.

This was driven by a stellar performance in the Prepared Food & Dispensed Beverage category, with whole pies and hot sandwiches performing exceptionally well. The segment’s sales rose 11.4% year over year to $349.4 million. Same-store sales improved 7.5% compared with 5% in the year-ago quarter.

Grocery & General Merchandise sales rose 8.8% year over year to $865.5 million in the quarter. Same-store sales increased 2.8% compared with 5.8% growth in the year-ago quarter.

Charting the Path Ahead

Casey’s business model, private-label offerings, expansion of its footprint and digitization endeavors are likely to support sales. The company estimates Inside same-store sales to increase between 3.5% and 5% in fiscal 2024. Additionally, it anticipates maintaining an Inside margin within the range of 40%-41%, promising a healthy financial outlook. It expects fiscal 2024 EBITDA growth to be in line with the long-term strategic plan's target of 8-10%.

Investors have recognized its potential, with shares of this Zacks Rank #3 (Hold) company rising an impressive 37.1% in the past year, aligning with the industry’s growth.

3 Stocks Looking Red Hot

Here, we have highlighted three better-ranked stocks, namely Sprouts Farmers Market SFM, Vital Farms VITL and Grocery Outlet GO.

Sprouts Farmers is engaged in the retailing of fresh, natural and organic food products. It currently sports a Zacks Rank #1 (Strong Buy). SFM has a trailing four-quarter earnings surprise of 10%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings suggests growth of 6.7% and nearly 3.9%, respectively, from the year-ago reported numbers.

Vital Farms offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 155.4%, on average.

The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings calls for growth of 18.7% and nearly 30.5%, respectively, from the year-ago reported numbers.

Grocery Outlet, the extreme value retailer of quality, name-brand consumables and fresh products, currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings implies growth of 9.6% and 10.3%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 17%, on average.

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