Shares of the United States’ third-largest convenience store and fifth-largest pizza chain, Casey’s General Stores (NASDAQ: CASY), were up 6% as of 11:30 a.m. ET on Wednesday, according to data provided by S&P Global Market Intelligence.
Casey’s delivered third-quarter earnings that smashed analysts’ expectations and showed that its growth prospects remain as bright as ever.
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For the third quarter, Casey’s reported that earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 11% and guided for similar EBITDA growth for the full year.
While Casey’s Q3 net income was flat compared to last year, it would have risen 15% if not for one-time costs related to the $1.1 billion acquisition of Fikes Wholesale and its 198 stores in 2024.
This 11% EBITDA and 15% adjusted net income growth is noteworthy to investors because it shows the company’s ability to maintain robust profitability despite currently integrating one of the most significant purchases in its history.
This ability to balance store growth with steady profits is paramount to Casey’s, as it seeks to continue expanding geographically. With 2,000 of its 2,900 stores in just six states, there is ample white space for the company to add new stores, since Casey’s distribution centers cover 20 Midwestern states.
Further highlighting this white space potential, two-thirds of Casey’s existing stores serve communities of less than 20,000 people. However, roughly 75% of the towns with a population between 500 and 20,000 in Casey’s distribution footprint do not yet have a store.
As the company looks to take its beloved pizza-making abilities to these towns, investors could soon see many more quarters like this. Casey’s has already doubled in my daughter’s portfolio, but thanks to promising results like these, I won’t hesitate to keep adding shares.
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Josh Kohn-Lindquist has positions in Casey’s General Stores. The Motley Fool recommends Casey’s General Stores. The Motley Fool has a disclosure policy.
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