Casey’s General Stores (CASY:NYE) experienced a 4.5% drop in its stock price during extended trading on June 6, following the release of weak Q4FY23 results. This blog post delves into the details of Caseys stock performance, explores the reasons behind the drop, and evaluates whether CASY stock remains a viable investment option.
Disappointing Q4FY23 Results:
Casey’s General Stores reported diluted earnings of $1.49 per share for Q4FY23, falling short of the analyst consensus of $1.64 per share and the previous year’s figure of $1.60 per share. Additionally, the company’s sales of $3.33 billion declined by 3.7% year-over-year, below the analyst expectations of $3.38 billion. However, inside same-store sales demonstrated a positive growth of 6.5% year-over-year, driven by increasing demand for alcoholic and non-alcoholic beverages, as well as pizza and bakery products.
Factors Influencing the Caseys Stock Price Drop:
Several factors contributed to the drop in Caseys stock. One significant factor was the lower-than-expected earnings and sales figures for Q4FY23. The company’s operating expenses also increased by 6.3% year-over-year, primarily due to operating additional stores compared to the previous year. However, it’s worth noting that Casey’s General Stores successfully added 81 new stores, and its Rewards program witnessed growth with 6.4 million members at the end of April 2023.
Caseys Stock Performance and Outlook:
Currently priced at $224.26, Caseys stock has experienced a year-over-year increase of 9.5%, but year-to-date gains remain modest at 1.8%. Looking ahead to FY24, Casey’s General Stores anticipates inside same-store sales growth between 3% to 5% annually. The company also projects total operating expenses to rise by 5% to 7% during the year, with plans to add 110 new stores.
Expert Analysis and Recommendations:
Goldman Sachs analyst Bonnie Herzog reiterated a Hold rating on CASY stock following the Q4FY23 results. While impressed by the Q4 performance, Herzog suggests that consensus estimates for Casey’s FY24 may require downward adjustments, considering the expected same-store fuel gallon growth of -1% to +1%. However, all six analysts covering the stock maintain a Buy rating, resulting in a Strong Buy consensus analyst rating. The average price forecast for Caseys stock stands at $276.50, implying a 23.3% upside potential from the current levels.
Conclusion:
The drop in Caseys stock can be attributed to disappointing Q4FY23 results, particularly in earnings and sales figures. However, the company’s positive same-store sales growth and plans for expansion indicate potential for recovery. Investors should consider expert analysis and evaluate the stock’s performance to make an informed decision on whether CASY stock remains a suitable investment option.
