November 16, 2023
Top 10 Stock Casey's Hold Recommendation

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For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View Casey's Hold

360 METRICS	November 16, 2023
VALUE
VALUE	25
GROWTH
GROWTH	35
SAFETY
SAFETY	92
SENTIMENT
SENTIMENT	57
360° VIEW
360° VIEW	42

ANALYSIS: With an Obermatt 360° View of 42 (better than 42% compared with alternatives), overall professional sentiment and financial characteristics for the stock Casey's are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Casey's. The consolidated Sentiment Rank has a good rank of 57, which means that professional investors are more optimistic about the stock than for 57% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 92 or better than 92% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 25, meaning that the share price of Casey's is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 35. ...read more

RECOMMENDATION: With a consolidated 360° View of 42, Casey's is worse than 58% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 57) and safe financing practices (Safety Rank of 92), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Casey'ṣ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more

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Sentiment Strategy: Professional Market Sentiment for Casey's positive

SENTIMENT METRICS	November 16, 2023
ANALYST OPINION
ANALYST OPINION	83
OPINIONS CHANGE
OPINIONS CHANGE	50
PRO HOLDINGS
PRO HOLDINGS	69
MARKET PULSE
MARKET PULSE	30
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	57

ANALYSIS: With an Obermatt Sentiment Rank of 57 (better than 57% compared with alternatives), overall professional sentiment and engagement for the stock Casey's is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Casey's. Analyst Opinions are at a rank of 83 (better than 83% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 50, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in Casey's. Finally, the Professional Investors rank is 69, which means that currently, professional investors hold more stock in this company than in 69% of alternative investment opportunities. ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 57 (more positive than 57% compared with investment alternatives), Casey's has a reputation among professional investors that is above-average compared with that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 30, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 70% of competitors). This could mean future risks and should make investors careful. Attention to negative news for Casey's is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more

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Value Strategy: Casey's Stock Price Value below-average critical

VALUE METRICS	November 16, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	40
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	28
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	31
DIVIDEND YIELD
DIVIDEND YIELD	45
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	25

ANALYSIS: With an Obermatt Value Rank of 25 (worse than 75% compared with alternatives), Casey's shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Casey's. Price-to-Sales is 40 which means that the stock price compared with what market professionals expect for future profits is higher than 60% of comparable companies, indicating a low value concerning Casey's's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 31, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Casey's. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 28 and Dividend Yield, which is lower than 55% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 25, is a hold recommendation based on Casey's's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Casey's? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Casey's? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Casey's may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more

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Growth Strategy: Casey's Growth Momentum low

GROWTH METRICS	November 16, 2023
REVENUE GROWTH
REVENUE GROWTH	66
PROFIT GROWTH
PROFIT GROWTH	34
CAPITAL GROWTH
CAPITAL GROWTH	25
STOCK RETURNS
STOCK RETURNS	79
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	35

ANALYSIS: With an Obermatt Growth Rank of 35 (better than 35% compared with alternatives), Casey's shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Casey's. Sales Growth has a rank of 66 which means that currently professionals expect the company to grow more than 66% of its competitors. Stock Returns are also above average with a rank of 79. But Capital Growth has only a rank of 25, which means that currently professionals expect the company to grow its invested capital less than 75% of its competitors. Profit Growth is also low, with a rank of only 34, which means that, currently, professionals expect the company to grow its profits below average. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 35, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 79% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more

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Safety Strategy: Casey's Debt Financing Safety very solid

SAFETY METRICS	November 16, 2023
LEVERAGE
LEVERAGE	71
REFINANCING
REFINANCING	47
LIQUIDITY
LIQUIDITY	78
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	92

ANALYSIS: With an Obermatt Safety Rank of 92 (better than 92% compared with alternatives) for 2023, the company Casey's has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Casey's is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Casey's. Leverage is at a rank of 71, meaning the company has a below-average debt-to-equity ratio. It has less debt than 71% of its competitors. Liquidity is also good at a rank of 78, meaning the company generates more profit to service its debt than 78% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 47, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 53% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 92 (better than 92% compared with alternatives), Casey's has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Casey's. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more

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Combined financial peformance: Casey's Below-Average Financial Performance

COMBINED PERFORMANCE	November 16, 2023
VALUE
VALUE	25
GROWTH
GROWTH	35
SAFETY
SAFETY	78
COMBINED
COMBINED	45

ANALYSIS: With an Obermatt Combined Rank of 45 (worse than 55% compared with investment alternatives), Casey's (Food Retail, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Casey's are low in value (priced high) with a consolidated Value Rank of 25 (worse than 75% of alternatives) and show below-average growth (Growth Rank of 35) but are safely financed (Safety Rank of 92), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 45, is a hold recommendation based on Casey's's financial characteristics. As the company Casey's's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 25) and low growth (Obermatt Growth Rank of 35), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 92) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more

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