Casey’s General Store (CASY) Stock Gets Rating Upgrade at BMO Capital

Casey’s General Store (CASY) was upgraded to 'market perform' from 'underperform' at BMO Capital Markets.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Casey's General Stores (CASY) - Get Report was upgraded to "market perform" from "underperform" at BMO Capital Markets on Monday morning. The firm hiked up its rating on the convenience stores company stock to $105 from $80.

The upgrade follows Casey's "strong" fiscal year 2016 earnings results and a "significant improvement in expense leverage," the firm said in an analyst note.

"Casey's F1Q16 results were solid, in our view, supported by strong merchandise same store sales (+8% y/y on blended basis, strong comp gallon growth (+3.4% y/y), solid merchandise margin expansion (blended in-store margins +100 bps y/y) and significant improvement in expense leverage," the firm added.

The firm sees Casey's initiatives and unique pricing power and "favorable halo of lower gas prices" as further reasons to upgrade its rating.

Shares of Casey's General Stores closed lower by 1.12% to $110.81 on Friday afternoon.

Separately, TheStreet Ratings team rates CASEYS GENERAL STORES INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

We rate CASEYS GENERAL STORES INC (CASY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.96% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CASY should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CASEYS GENERAL STORES INC has improved earnings per share by 22.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CASEYS GENERAL STORES INC increased its bottom line by earning $4.62 versus $3.27 in the prior year. This year, the market expects an improvement in earnings ($4.86 versus $4.62).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 23.4% when compared to the same quarter one year prior, going from $50.10 million to $61.81 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market, CASEYS GENERAL STORES INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.21 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: CASY

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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