Title

Casey’s General Stores: A Financial Valuation

Date of Award

Spring 5-5-2018

Document Type

Thesis (699 registration)

Degree Name

Master of Science in Accounting & Finance

Department

Graduate Studies

Committee Chair

Dr. Thomas Hanson

Keywords

Casey's, Valuation, convenience store, Finance, gas station, food industry

Abstract

Casey’s General Stores, Inc (Casey’s) is the fourth largest convenience store chain in the United States and recent growth of its prepared food sales has made it the fifth largest pizza chain as well. Over half of the stores were opened in rural towns with populations smaller than 5,000. Corporate headquarters are in Iowa, next to the company’s original distribution center. Increased sales volumes and higher gross profit margins resulted in Casey’s having its best year ever in fiscal 2016, recording net income of $226 million. Since that time increasing operating expenses and a decline in the agriculture economy have hurt the company’s performance. Management has implemented changes to address rising operating expenses and is engaging in a share repurchase program to return value to shareholders. Quantitative and qualitative information about Casey’s, its competitors, and the markets it operates in was analyzed for this report. A discounted cash flow model was used to forecast future free cash flows. The model estimated Casey’s common stock to be fairly valued at $99.22 per share. This is higher than the current price of $96.97 and a buy recommendation is made.

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