- Casey's has a proven track record in increasing dividends annually for 14 years.
- Casey's has expanded throughout 14 states and has over 1800 stores.
- Sales are growing faster than 11% and profits are growing faster than 15%.
- Company owns most of its property's real estate to include the stores, the distribution centers and it's headquarters.
Casey’s General Stores, Inc. (CASY), together with its subsidiaries, operates convenience stores under the Casey’s General Store name in 14 Midwestern states, primarily Iowa, Missouri, and Illinois. Its stores offer a selection of food, including pizzas, donuts, and sandwiches; beverage and tobacco products; health and beauty aids; automotive products; and other nonfood items. The company also engages in the retail sale of gasoline or gasohol under the Casey’s name on a self-service basis. As of April 30, 2013, it operated approximately 1,749 stores. The company was founded in 1959 and is headquartered in Ankeny, Iowa. (Daily Chart) (Weekly Chart)
29 June 2014
1yr Target $76.52
1yr Cap Gain 9.39%
1yr Tot Return 10.53%
Market Cap $2.69 Bil
3yr EarnGR 15.88%
5yr EarnGR 15.61%
3yr DivGR 12.78%
5yr DivGR 19.13%
Payout Ratio 22.98%
EPS (ttm) $3.48
EPS next yr $4.02
Sales historically have been stronger during the first and second fiscal operating quarters (May through October) and relatively weaker during the third and fourth operating quarters (November through April). In warmer weather customers tend to purchase greater quantities of fuel and certain convenience items such as beer, pop, and ice than in colder weather.
In addition, Casey's currently owns a significant amount of the real estate that their businesses occupy, to include the Company's Distribution Center, the Services Company facility, and the Corporate Headquarters facility.
Earnings have also been moving upward as can be seen below with estimates increasing to $3.60 in 2015 and $4.02 in 2016. These estimates could easily be conservative estimates simply based upon the company's historical annual earnings growth rate of near 15%. Dividends have been increasing annually for the last 14 years and are projected to increase in 2015 and 2016 once again. Management's decision to keep the disbursements low and the dividend payout ratio in the upper teens and low twenties virtually guarantees that future dividends will continue to increase for many years to come (take note dividend growth investors!).
Revenue growth rates are both excellent and consistent over several calculated periods, as can be seen below. Since this company has location in 14 started but has most of its stores concentrated in only three states (Iowa, Missouri and Illinois), it's obvious that expansion will continue within all of these 14 states and it can be expected that the company will eventually expand into all of the adjoining states. Earnings growth rates are also excellent and are greater than the revenue growth rates which demonstrates both great management and excellent cost control.
Finally dividend growth rates today are somewhere between the current revenue growth rate and the current earnings growth rate. With a payout ratio near 20% (extremely low) and earnings growing faster than dividends, I can expect future dividend increases to approximately in line with the growth rate of earnings before too long, and they may actually increase faster than earnings if management decides to increase the payout ratio upward toward 25%. And that's the kind of information that a dividend growth investor always likes to hear.
Technically this looks like an opportune time to begin buying these shares and then to add to this position at this or a lower price. This company has a long history of increasing revenues, earnings, and especially dividends and companies like this are usually priced at a premium to the market. Currently this company is not.
I am looking to initiate a position in this company as soon as possible and then to add to that position over time. Any pullback in the price of this company would probably initiate a transfer of funds into this stock. This looks to be one of those companies that a dividend growth investor like myself will hold for many, many years.
The President and Chief Executive Officer's Message to shareholders can be found just to the right.