vendredi 10 mars 2017

Casey's (CASY)

September 2010, Couche-Tard tries to buy Casey's for about 2 billion dollars. Casey's, contrary to the others acquisition of Couche-Tard is a performant convenience stores chain.

The deal is massively rejected by Casey's shareholders. Couche-Tard doesn't whine for to long, looks elsewhere and eventually buys Statoil. And a few years later, CST brands.

I'm not a specialist of convenience stores but I believe that Casey's is one of the best convenience stores stock in America, and maybe in the world. However, for a few quarters, the results have not been that good. More precisely, for the last 4 quarters, the estimates have been missed. And the last results have been pretty bad: Casey's missed the estimates by about 35%. It's very bad.

However, the numbers of the business are great. Let's take a look below:

Stock performance last 5 years: 107%
Stock performance last 10 years: 346%

Average ROE last 5 years: 22
Actual ROE: 17

PE high last 5 years: 22
PE low last 5 years: 18
Actual PE: 22

Debt level: medium (about 8 times earnings)
Dilution or buyback: slight dilution over the last 5 years

EPS 2012: 3,04$
EPS 2013: 2,86$
EPS 2014: 3,46$
EPS 2015: 4,62$
EPS 2016: 5,73$
EPS 2017: it will be below 2016 EPS

I believe that CASY should go lower this year because the PE is at the top of the range for the last 5 years and CASY missed the estimates in the last quarters. There's no reason why that stock should go up. At 22 times earnings, the stock is expensive.

But it may be an interesting prey for a predator like Couche-Tard. And if it's not a prey, I don't think that it's the beginning of the end for that stock. It's probably just a bad period.

Jason Donville may say that he likes healthcare and technology because these sectors offer the highest ROE. However, things can change pretty quickly for these sectors, which is less frequent for sectors like retail stores.

So, not a buy right now, but definetely a stock to put on a watch list.

2 commentaires:

  1. I was watching Casey's for a while. I do not think they would agree to any buy-out. I think they want to be the next Couche Tard.

  2. Maybe their shareholders will change their mind if Casey's keeps on missing estimates.