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Here's How Casey's (CASY) Looks Just Ahead of Q1 Earnings

Zacks Equity Research
·4 mins read

Casey's General Stores, Inc. CASY is likely to register a decline in the top line when it reports first-quarter fiscal 2021 numbers on Sep 8, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $2,134 million, indicating a decline of 18.8% from the prior-year reported figure.

Although the Zacks Consensus Estimate for earnings for the quarter under review has improved by 2.2% over the past seven days to $1.88, it still suggests a decline of 18.6% from $2.31 in the prior-year quarter.

Notably, this Ankeny, IA-based company has a trailing four-quarter earnings surprise of 1.8%, on average. In the last reported quarter, the company delivered a negative earnings surprise of 15.2%.

Key Factors to Note

The coronavirus-induced stay-at-home trends and social distancing measures are likely to have impacted Casey's top-line performance in the quarter to be reported. It comes as no surprise that social-distancing measures have dented the demand for fuel. We note that the company has been grappling with soft fuel gallons same-store sales for quite some time now. The Zacks Consensus Estimate indicates a decline of 10% in the aforementioned metric for the quarter under review. It also suggests a decline of 6.3% in total gallons sold for the quarter. As a result, sales at the Fuel category might have declined year over year. The Zacks Consensus Estimate for sales for the Fuel category is pegged at $1,247 million, which suggests a decline of 23.4% from the year-ago period.

Again, we note that the company’s Prepared Food and Fountain category is likely to have remained under pressure. In the last reported quarter, soft traffic owing to the coronavirus crisis and regulations prohibiting self-serve food service hurt the segment’s performance. The Zacks Consensus Estimate for fiscal first-quarter sales for the category is pegged at $280 million, which indicates a decline of 5.4% from the prior-year quarter. Also, the consensus estimate indicates a decrease of 8% in same-store sales.

Nonetheless, Casey’s Grocery & Other Merchandise category may have provided some cushion to the company’s fiscal first-quarter top line. The segment is likely to have benefited from coronavirus-led spike in demand. The Zacks Consensus Estimate for sales for the category is pegged at $713 million, which suggests an increase of 3.6% from the prior-year reported figure. Also, the consensus estimate indicates a jump of 1.5% in same-store sales.

Certainly, efforts such as price and product optimization, digital engagements comprising mobile app and online ordering capabilities, and lowering of production of prepared foods in order to contain in-store stale costs are commendable. The company has also been focusing on improving distribution efficiency.

However, concerns related to higher operating expenses cannot be ignored. This may be due to higher hourly wage rates and increased costs of cleaning and other pandemic-related supplies. Also, any deleverage in commodity costs and higher promotional activity might have weighed on margins.

Caseys General Stores, Inc. Price, Consensus and EPS Surprise

Caseys General Stores, Inc. Price, Consensus and EPS Surprise
Caseys General Stores, Inc. Price, Consensus and EPS Surprise

Caseys General Stores, Inc. price-consensus-eps-surprise-chart | Caseys General Stores, Inc. Quote

What Does the Zacks Model Unveil?

Our proven model predicts an earnings beat for Casey's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Casey's has a Zacks Rank #2 and an Earnings ESP of +4.79%.

3 More Stocks With the Favorable Combination

Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

RH RH has an Earnings ESP of +13.47% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Darden Restaurants DRI has an Earnings ESP of +114.7% and a Zacks Rank #2.

Costco COST has an Earnings ESP of +2.61% and a Zacks Rank #3.

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Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
 
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Caseys General Stores, Inc. (CASY) : Free Stock Analysis Report
 
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