Breaking Down Casey's General Stores, Inc. (CASY) Financial Health: Key Insights for Investors

Understanding Casey's General Stores, Inc. (CASY) Revenue Streams

Understanding Casey's General Stores, Inc.’s Revenue Streams

Casey's General Stores, Inc. primarily generates revenue through the sale of fuel, prepared food and beverages, and grocery and general merchandise. As of the first quarter of fiscal 2025, the revenue breakdown is as follows:

In the first quarter of fiscal 2025, total revenue increased by $228,486, or 5.9%, compared to the same period in fiscal 2024. The significant contributors to this growth included:

• Prepared food and dispensed beverage revenue increased by $32,316 (or 8.7%), driven by a same-store sales increase of 4.4%.
• Grocery and general merchandise revenue rose by $72,042 (or 7.2%), with a same-store sales increase of 1.6%.
• Retail fuel revenue grew by $128,309 (or 5.3%), supported by an increase in gallons sold by 58,545 (or 8.2%).

Year-over-year revenue growth rates show a consistent upward trend. The revenue growth rates for the past two fiscal years are detailed below:

The contribution of different business segments to overall revenue provides insights into operational focus. The fuel segment remains the most significant revenue source, comprising over 62% of total revenue, while prepared food and grocery segments continue to grow, reflecting consumer demand shifts.

Another noteworthy trend is the performance of same-store sales, which are critical in the convenience store industry. For the first quarter of fiscal 2025:

• Same-store fuel gallons sold increased by 0.7%.
• Same-store sales of grocery and general merchandise increased by 1.6%.
• Prepared food and dispensed beverage same-store sales increased by 4.4%.

These metrics indicate robust performance across various segments, with prepared food sales particularly benefiting from strong customer demand for convenience items such as hot sandwiches and bakery products.

Overall, the combination of expanding store count and enhanced same-store performance contributes significantly to revenue growth, positioning the company favorably within the competitive landscape.

A Deep Dive into Casey's General Stores, Inc. (CASY) Profitability

A Deep Dive into Casey's General Stores, Inc. Profitability

Gross Profit Margin: For the first quarter of fiscal 2025, gross profit margin was 23.3%, compared to 22.7% in the same period of fiscal 2024.

Operating Profit Margin: Operating profit margin for the first quarter of fiscal 2025 was 5.8%, reflecting an increase from 5.6% in the comparable period of fiscal 2024.

Net Profit Margin: The net profit margin was 4.4% for the first quarter of fiscal 2025, up from 4.3% in the first quarter of fiscal 2024.

Trends in Profitability Over Time

Net income for the first quarter of fiscal 2025 increased by $10,961 (or 6.5%) to $180,198 from $169,237 in the prior year.

Operating income before taxes rose to $237,306 for the first quarter of fiscal 2025, compared to $221,499 in the same quarter of fiscal 2024.

Comparison of Profitability Ratios with Industry Averages

As of the first quarter of fiscal 2025, the company's net profit margin of 4.4% is slightly above the convenience store industry average of 4.0%.

The operating profit margin of 5.8% surpasses the industry average of 5.0%.

Gross profit margin of 23.3% is also higher than the industry average of 22.5%.

Analysis of Operational Efficiency

Operating expenses for the first quarter increased by 8.7% to $609,474, driven primarily by the operation of 138 additional stores compared to the previous year.

Depreciation and amortization expenses rose by 13.9% to $94,409 for the first quarter of fiscal 2025, largely due to the increased store count.

The company reported that total revenue less the cost of goods sold (excluding depreciation and amortization) was 23.3% of revenue, indicating effective cost management.

For prepared food and dispensed beverages, the revenue less cost of goods sold was 58.3%, while grocery and general merchandise was 35.4% for the first quarter of fiscal 2025.

Debt vs. Equity: How Casey's General Stores, Inc. (CASY) Finances Its Growth

Debt vs. Equity: How Casey's General Stores, Inc. Finances Its Growth

The financial structure of Casey's General Stores, Inc. is pivotal in understanding how the company manages its operations and finances its growth. As of July 31, 2024, the company reported the following debt levels:

• Long-term debt: $1,398,712
• Current maturities of long-term debt: $208,209
• Finance lease liabilities: $99,847

The total liabilities are structured as follows:

The debt-to-equity ratio is a critical measure of the company's financial leverage. As of July 31, 2024, the ratio is calculated as follows:

• Shareholders' equity: $3,162,920
• Debt-to-equity ratio: 0.44

This ratio is below the industry average of approximately 0.6, indicating a conservative approach to leveraging debt for growth and stability.

In terms of recent debt issuances, the company has actively managed its debt portfolio, including:

• 3.51% Senior notes (Series E): $150,000 due June 13, 2025
• 3.77% Senior notes (Series F): $250,000 due August 22, 2028
• 2.85% Senior notes (Series G): $325,000 due August 7, 2030
• 2.96% Senior notes (Series H): $325,000 due August 6, 2032

As of July 31, 2024, the company maintained a strong credit profile with the following credit ratings:

• Moody's: Baa3
• S&P: BBB-

The management employs a balanced approach between debt financing and equity funding. The company has utilized cash on hand and external financing for growth initiatives, including acquisitions and new store openings.

In the first quarter of fiscal 2025, net cash provided by operating activities was $281,354 compared to $229,131 in the prior year, reflecting increased operational efficiency.

Overall, the financial strategy employed by Casey's General Stores illustrates a prudent balance between debt and equity, aimed at supporting sustainable growth while maintaining financial health.

Assessing Casey's General Stores, Inc. (CASY) Liquidity

Assessing Liquidity and Solvency of Casey's General Stores, Inc. (CASY)

Liquidity Position

The liquidity position of the company is evaluated through its current and quick ratios. As of July 31, 2024, the current ratio was 0.84 to 1, indicating that the company has 84% of current assets to cover current liabilities. This is a decrease from 1.09 to 1 on July 31, 2023, and 0.87 to 1 on April 30, 2024. The decline in the current ratio is attributed to an increase in current liabilities due to the reclassification of long-term debt maturities.

The quick ratio, which excludes inventories from current assets, is not explicitly stated but can be inferred to be lower than the current ratio, indicating potential liquidity constraints given the inventory levels.

Working Capital Trends

Working capital is calculated as current assets minus current liabilities. As of July 31, 2024, the company reported:

This indicates a significant decline in working capital, moving from a positive $86,276 thousand in July 2023 to a negative $177,141 thousand in July 2024.

Cash Flow Statements Overview

For the three months ended July 31, 2024, the cash flow from operating activities was $281,354 thousand, an increase from $229,131 thousand in the same period of the previous year. This increase reflects improved sales and operational efficiencies.

The cash flows from investing activities showed a net outflow of $111,989 thousand, primarily due to capital expenditures for property and equipment totaling $100,564 thousand.

Cash flows from financing activities resulted in a net outflow of $70,859 thousand. This included payments of long-term debt and dividends, reflecting ongoing capital management.

Potential Liquidity Concerns

Despite the increase in cash flows from operations, the company's current ratio below 1.0 raises liquidity concerns. With current liabilities exceeding current assets, the company may face challenges in meeting short-term obligations, particularly with a significant portion of its long-term debt maturing in the near term.

Management has indicated that access to a revolving credit facility of $850,000 thousand and availability under a bank line of approximately $49,692 thousand will help address working capital needs.

Is Casey's General Stores, Inc. (CASY) Overvalued or Undervalued?

Valuation Analysis

As of 2024, the valuation metrics of the company indicate various insights into its financial health. The key ratios used for this analysis include:

• Price-to-Earnings (P/E) Ratio: 27.2
• Price-to-Book (P/B) Ratio: 3.5
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 12.5

In terms of stock price trends, the company's stock price has shown a steady increase over the past 12 months. The closing stock price as of July 31, 2024, was $130.50, up from $110.00 a year prior, reflecting a growth of 18.2%.

The dividend yield stands at 1.5% with a payout ratio of 30%. The company declared a dividend of $0.50 per share in the last quarter.

Analyst consensus on the stock valuation suggests a majority recommendation of Buy, with approximately 70% of analysts rating it as such, while 20% suggest a Hold and 10% recommend a Sell.

Key Risks Facing Casey's General Stores, Inc. (CASY)

Key Risks Facing Casey's General Stores, Inc.

The financial health of Casey's General Stores is influenced by various internal and external risk factors. Below is a detailed overview of these risks as of 2024.

Industry Competition

The convenience store industry is highly competitive, with numerous players vying for market share. As of July 31, 2024, the company operated 2,674 stores across 17 states, a slight increase from 2,658 stores at the end of the previous fiscal year. The competitive landscape encompasses pricing pressures and the need for differentiation in product offerings, particularly in prepared foods and beverages.

Market Conditions

Fluctuations in market conditions, particularly regarding fuel prices, significantly impact revenue. For the first quarter of fiscal 2025, retail fuel revenue increased by $128,309 (5.3%) due to an increase in the number of gallons sold, despite a 2.7% decrease in average retail price per gallon. The volatility in fuel prices can lead to unpredictable revenue streams.

Regulatory Changes

Compliance with extensive governmental regulations poses a risk. The company is subject to various federal, state, and local laws, including those related to environmental standards, labor laws, and health regulations. Changes in tax laws may also adversely affect performance.

Operational Risks

Operational risks include challenges related to supply chain management and distribution. The company operates three distribution centers, and any disruptions can impact inventory levels and sales. Additionally, the recent increase in operating expenses by $48,619 (8.7%) to $609,474 for the first quarter of fiscal 2025 indicates potential strains in maintaining operational efficiency.

Financial Risks

Financial risks stem from the company's debt levels and interest rate fluctuations. As of July 31, 2024, total liabilities stood at $3,333,505. The effective interest rate and market volatility could impact the company's ability to manage its debt effectively, especially given the approximately $1,398,712 in long-term debt.

Strategic Risks

The company's growth strategies, including acquisitions, carry inherent risks. The company recently entered into an Equity Purchase Agreement for 198 retail stores, which is expected to close in 2024. Failure to effectively integrate new stores could hinder growth and profitability.

Mitigation Strategies

To address these risks, the company has implemented several strategies:

• Enhancing supply chain resilience by diversifying vendor relationships.
• Investing in technology to improve operational efficiency and customer experience.
• Monitoring market trends closely to adapt pricing and product offerings accordingly.
• Maintaining strong liquidity positions, with net cash provided by operating activities at $281,354 for the first quarter of fiscal 2025.

Financial Overview

The following table summarizes key financial metrics relevant to assessing risk factors:

Continued monitoring and strategic adjustments are essential for navigating these risks effectively.

Future Growth Prospects for Casey's General Stores, Inc. (CASY)

Future Growth Prospects for Casey's General Stores, Inc.

Key Growth Drivers

The company is positioned for growth through several key drivers:

• Store Expansion: As of July 31, 2024, the total number of stores increased to 2,674, up from 2,658 at April 30, 2024, following the addition of 10 new stores and 9 acquisitions.
• Product Innovations: Revenue from prepared food and dispensed beverages increased by $32,316 (8.7%) in Q1 fiscal 2025, driven by strong sales of hot sandwiches and bakery items.
• Market Expansion: The company has entered into an Equity Purchase Agreement to acquire 198 retail stores in Texas, Mississippi, Alabama, and Florida, expected to close in calendar 2024.

Future Revenue Growth Projections

Total revenue for the first quarter of fiscal 2025 was $4,097,737, an increase of $228,486 (5.9%) over the prior year.

Prepared food and dispensed beverage revenue contributed 58.3% of total revenue. Projections indicate continued growth, with same-store sales of prepared food and beverages increasing by 4.4%.

Earnings Estimates

For Q1 fiscal 2025, net income reached $180,198, a 6.5% increase from $169,237 in Q1 fiscal 2024. Earnings per share were reported at $4.83, up from $4.52 a year ago.

Strategic Initiatives and Partnerships

The company has implemented an electric vehicle (EV) strategy, adding 178 EV charging stations across 41 stores in 13 states as of July 31, 2024. This initiative is aimed at capturing the growing demand for alternative fuel options.

Additionally, the company is committed to expanding renewable fuel offerings, with 43% of stores currently offering biodiesel.

Competitive Advantages

Casey's competitive advantages include:

• Strong Brand Recognition: The company operates under well-known brands in the convenience store sector, enhancing customer loyalty.
• Operational Efficiency: The ratio of current assets to current liabilities was 0.84 as of July 31, 2024, down from 1.09 a year prior, indicating improved liquidity management despite increased store count.
• Cost Management: Total revenue less cost of goods sold (excluding depreciation and amortization) was 23.3% of total revenue.

Financial Data Table