Why Is Casey's (CASY) Up 3.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Casey's General Stores (CASY). Shares have added about 3.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Casey's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Casey's Q1 Earnings Beat Estimates, Revenues Down Y/Y
Casey's General Stores came up with first-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While the company's top line experienced a year-over-year decline, the bottom line showed improvement compared to the same period last year.
These results came against the backdrop of a more stable macro-operating environment, which allowed Casey's to highlight the resilience of its unique business model. The company demonstrated impressive strength in its Inside same-store sales, underscoring its ability to engage customers effectively. Furthermore, Casey's exhibited adeptness in managing operating expenses, reflecting its commitment to operational efficiency.
A Closer Look at Results
Casey's, one of the leading convenience store chains in the United States, posted quarterly earnings of $4.52 per share, which surpassed the Zacks Consensus Estimate of $3.36 and increased from earnings of $4.09 reported in the prior-year period.
Total revenues of $3,869.3 million came ahead of the Zacks Consensus Estimate of $3,852 million but decreased 13.1% year over year.
Inside sales jumped 8.1% to $1,369.7 million during the quarter. Inside same-store sales increased 5.4% compared with a 6.3% rise registered in the year-ago period. This was driven by stellar performance in the prepared food and dispensed beverage category, including whole pizza pies, hot sandwiches and donuts as well as non-alcoholic and alcoholic beverages, snacks and candy in the grocery and general merchandise category.
Margins & Expenses
The gross profit increased 5% year over year to $877.8 million due to a decline in the cost of goods sold. The gross margin expanded 390 basis points to 22.7%. The total inside gross profit increased 10.3% to $556.4 million. Meanwhile, the inside margin increased 80 basis points to 40.6%.
Adjusted EBITDA increased 7.6% year over year to $315.5 million during the quarter under discussion. This can be attributed to higher profitability inside the store, partially offset by a lower fuel margin and higher operating expenses.
Casey's witnessed an increase of 3.2% in operating expenses of $560.9 million. The metric increased for operating 82 more stores compared with the same period last year.
Performance of Categories
We note that Fuel sales decreased 21.6% year over year to $2,427.3 million during the quarter. Fuel gallons sold jumped 3.6% to 714 million due to an increase in the store count.
Fuel gallons same-store sales rose 0.4% against a 2.3% decline registered in the year-ago period. Fuel gross profit fell 3.6% to $297 million as the company lapped record-high fuel margins last year. We note that the fuel margin decreased to 41.6 cents per gallon from 44.7 cents per gallon in the prior-year period.
Grocery & General Merchandise sales rose 8% to $997 million during the quarter. Same-store sales increased 5.2% compared with 5.5% growth in the year-ago quarter. The Grocery & General Merchandise margin increased to 34.1% from 33.9% in the year-ago period.
Prepared Food & Dispensed Beverage sales rose 8.5% to $372.8 million. Same-store sales increased 5.9% compared with 8.4% in the year-ago quarter. The Prepared Food & Dispensed Beverage margin increased to 58.2% from 55.6% in the year-ago period.
Store Update
As of Jul 31, 2023, the company operated 2,536 stores. Casey's expects to add at least 150 stores in fiscal 2024.
Other Financial Aspects
Casey's ended the quarter with cash and cash equivalents of $439.1 million, long-term debt and finance lease obligations (net of current maturities) of $1,598.5 million and shareholders’ equity of $2,776.3 million.
During the quarter, Casey's repurchased shares worth approximately $30 million. The company has $370 million remaining under its existing share repurchase authorization.
FY24 Outlook
For fiscal 2024, Casey's estimates inside same-store sales to increase between 3% and 5% and the inside margin in the band of 40. Management foresees same-store fuel gallons sold between negative 1% and positive 1%. It anticipates total operating expenses to increase approximately 5% to 7%. The company expects to invest roughly $500 million to $550 million in fiscal 2024.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Casey's has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Casey's has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
