Why Did Casey’s General Stores Stock (NYSE:CASY) Drop Yesterday?

Shares of Casey’s General Stores (NYSE:CASY) dropped 4.5% in extended trading on June 6 after reporting weak Q4FY23 results. The American convenience chain store operator posted diluted earnings of $1.49 per share, lower than the analyst consensus of $1.64 per share, and also below the prior-year number of $1.60 per share.  

Further, sales of $3.33 billion fell 3.7% year-over-year and also came in lower than analyst expectations of $3.38 billion. Meanwhile, inside same-store sales grew by 6.5% year-over-year, thanks to the growing demand for both alcoholic and non-alcoholic drinks, as well as pizza and bakery products.

Moreover, total operating expenses grew 6.3% year-over-year, mainly due to operating 69 more stores compared to the prior-year quarter. In addition, the company successfully added 81 new stores, and its Rewards members grew to 6.4 million at year-end, April 30, 2023.

For the full Fiscal year 2023, diluted earnings came in at $11.91 per share, growing 30.9% annually. In June, the company even increased its quarterly dividend for the 24^th consecutive year by 13% to $0.43 per share.

Looking ahead, for FY24, Casey’s expects inside same-store sales to grow between 3% to 5% annually. Also, total operating expenses are likely to grow between 5% to 7% in the year, with the company targeting to add 110 stores.

Is CASY a Good Stock to Buy?

Following the results, Goldman Sachs analyst Bonnie Herzog reiterated a Hold rating on CASY stock. While Herzog was impressed by the Q4 print, the analyst believes Casey’s FY24 consensus estimates may need to be lowered keeping in mind the company’s same-store fuel gallon growth of between -1% to +1%.

Except for Herzog, all six analysts have a Buy rating on CASY stock, giving it a Strong Buy consensus rating. The average Casey’s General Stores price forecast of $276.50 implies 23.3% upside potential from current levels. Year-to-date, CASY stock has gained 1.8%.

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