Shares of convenience store chain Casey's General Stores (CASY -0.37%) skyrocketed to all-time highs today after reporting financial results for its fiscal fourth quarter of 2024. As of 10 a.m. ET, Casey's stock was up about 16%.
A huge profit compared to muted expectations
Casey's stock has outperformed the S&P 500 for quite a long time, so it's a little surprising how low investors' expectations were going into this report. On average, analysts had expected the company to report earnings per share (EPS) of about $1.70. But it shocked the investing community by reporting Q4 EPS of $2.34.
Casey's sells fuel, but sales for prepared foods and dispensed beverages are what really shined during Q4 (the period that ended in April). The company has fountain drinks and makes food, such as pizza, and this part of the business has a nearly 60% gross profit margin. Same-store sales in this category were up a whopping 7% year over year in Q4, majorly contributing to Casey's outperformance on the bottom line.
What's next for Casey's stock?
Trading at nearly 1 times its trailing sales, the valuation for Casey's stock is close to an all-time high as well, which is reason for caution here. That said, the company is still growing by opening and acquiring new convenience store locations. And its high-margin menu is certainly attracting plenty of customers right now, which is good.
The surge in the popularity of prepared foods should keep profits strong. Casey's has a long history of returning profits to shareholders, which is why this is still a good buy-and-hold investment. Management just raised its dividend by 16% -- its 25th consecutive year of raising the quarterly payout.
It's not the most exciting company to invest in, but Casey's stock is up more than 400% over the last 10 years, thanks to the slow and steady progress reflected in its Q4 report. Its track record leads me to believe that this business will continue performing quite well for shareholders.
