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Casey's (CASY) Gains Market Share on Operational Strength
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Casey's General Stores, Inc.’s (CASY - Free Report) operational initiatives such as strengthening omni-channel solutions, expanding customer reach and focusing on private-label offerings reinforce its position in the industry.
Let’s Analyze
Casey's price and product optimization strategies, increased penetration of private brands, and digital engagements comprising mobile app and online ordering capabilities are commendable. This third largest convenience retailer and the fifth-largest pizza chain’s self-distribution model, strength in the Inside category and acquisition activities bode well. The same was reflected in fourth-quarter fiscal 2022 results, wherein both the top and the bottom lines grew year over year.
Total revenues of $3,458.9 million climbed 45.4% year over year. Revenues grew across all three categories, namely Fuel, Grocery & General Merchandise, and Prepared Food & Dispensed Beverage. We note that Fuel sales surged 62.2% to $2,344.6 million during the quarter. While Fuel gallons sold jumped 16% to 621.1 million, Fuel gallons same-store sales rose 1.5%.
Inside sales comprising Grocery & General Merchandise and Prepared Food & Dispensed Beverage jumped 13.6% to $1,037.3 million during the quarter. Inside same-store sales increased 5.2% compared with a 12.8% rise registered in the year-ago period. While Grocery & General Merchandise sales advanced 14.5% to $744 million, Prepared Food & Dispensed Beverage sales increased 11.3% to $293.3 million in the quarter.
Image Source: Zacks Investment Research
Casey’s focus on technology advancements, merchandise ordering efficiency, inventory management and data analytics positions it well for future growth. The company has been strengthening pizza promotions for guests seeking meal solutions, along with enhancing breakfast lineups. It has been increasing penetration of private brands and exited the fourth quarter at 5% penetration of the grocery and general merchandise category. It currently offers more than 250 items under its private brand and remains confident of attaining 6% penetration next year with a long-term goal of 10%.
CASY’s digital engagements help create a seamless shopping experience and facilitate same-store sales growth. The company’s mobile app now represents 65% of all digital revenues. Management remains optimistic about Casey's Rewards program, which exceeded 5 million members. CASY is enhancing delivery capabilities via DoorDash and Uber Eats.
The convenience store chain has been steadily expanding its store base to boost sales. Progressing along such lines, Casey's acquired Buchanan Energy, known for its Bucky’s Convenience Stores and 48 Circle-K stores, primarily in Oklahoma City. The Buchanan Energy transaction included 92 retail locations (24 stores in Nebraska, 56 in Illinois, five in Iowa, three in Missouri and four in Texas) and a dealer network of 81 stores. Casey's also closed on the buyout of 40 stores from Pilot Corporation.
Wrapping Up
Casey’s business model, private-label offerings, expanding footprint and digitization endeavors should support sales. The company envisions fiscal 2023 same-store Inside sales to increase 4-6% and expects to maintain an Inside margin of about 40%. However, higher operating expenses remain a matter of concern. Management foresees operating expenses to increase approximately 9-10% in fiscal 2023.
Shares of this Zacks Rank #3 (Hold) company have fallen 4.5% so far in the year compared with the industry’s decline of 7.2%.
Dollar Tree, which operates discount variety retail stores, flaunts a Zacks Rank #1 (Strong Buy) at present. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago reported numbers. DLTR has an expected EPS growth rate of 15.5% for three-five years.
Sysco Corporation, which is engaged in the marketing and distribution of various food and related products, sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Sysco Corporation’s current financial year sales and EPS suggests growth of 32.5% and 124.3%, respectively, from the year-ago period. SYY has an expected EPS growth rate of 11% for three-five years.
Kroger, the renowned grocery retailer, carries a Zacks Rank of 2 (Buy) at present. KR has an expected EPS growth rate of 11.3% for three-five years.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 6.7% and 6.3%, respectively, from the year-ago reported number. KR has a trailing four-quarter earnings surprise of 20.3%, on average.
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Casey's (CASY) Gains Market Share on Operational Strength
Casey's General Stores, Inc.’s (CASY - Free Report) operational initiatives such as strengthening omni-channel solutions, expanding customer reach and focusing on private-label offerings reinforce its position in the industry.
Let’s Analyze
Casey's price and product optimization strategies, increased penetration of private brands, and digital engagements comprising mobile app and online ordering capabilities are commendable. This third largest convenience retailer and the fifth-largest pizza chain’s self-distribution model, strength in the Inside category and acquisition activities bode well. The same was reflected in fourth-quarter fiscal 2022 results, wherein both the top and the bottom lines grew year over year.
Total revenues of $3,458.9 million climbed 45.4% year over year. Revenues grew across all three categories, namely Fuel, Grocery & General Merchandise, and Prepared Food & Dispensed Beverage. We note that Fuel sales surged 62.2% to $2,344.6 million during the quarter. While Fuel gallons sold jumped 16% to 621.1 million, Fuel gallons same-store sales rose 1.5%.
Inside sales comprising Grocery & General Merchandise and Prepared Food & Dispensed Beverage jumped 13.6% to $1,037.3 million during the quarter. Inside same-store sales increased 5.2% compared with a 12.8% rise registered in the year-ago period. While Grocery & General Merchandise sales advanced 14.5% to $744 million, Prepared Food & Dispensed Beverage sales increased 11.3% to $293.3 million in the quarter.
Image Source: Zacks Investment Research
Casey’s focus on technology advancements, merchandise ordering efficiency, inventory management and data analytics positions it well for future growth. The company has been strengthening pizza promotions for guests seeking meal solutions, along with enhancing breakfast lineups. It has been increasing penetration of private brands and exited the fourth quarter at 5% penetration of the grocery and general merchandise category. It currently offers more than 250 items under its private brand and remains confident of attaining 6% penetration next year with a long-term goal of 10%.
CASY’s digital engagements help create a seamless shopping experience and facilitate same-store sales growth. The company’s mobile app now represents 65% of all digital revenues. Management remains optimistic about Casey's Rewards program, which exceeded 5 million members. CASY is enhancing delivery capabilities via DoorDash and Uber Eats.
The convenience store chain has been steadily expanding its store base to boost sales. Progressing along such lines, Casey's acquired Buchanan Energy, known for its Bucky’s Convenience Stores and 48 Circle-K stores, primarily in Oklahoma City. The Buchanan Energy transaction included 92 retail locations (24 stores in Nebraska, 56 in Illinois, five in Iowa, three in Missouri and four in Texas) and a dealer network of 81 stores. Casey's also closed on the buyout of 40 stores from Pilot Corporation.
Wrapping Up
Casey’s business model, private-label offerings, expanding footprint and digitization endeavors should support sales. The company envisions fiscal 2023 same-store Inside sales to increase 4-6% and expects to maintain an Inside margin of about 40%. However, higher operating expenses remain a matter of concern. Management foresees operating expenses to increase approximately 9-10% in fiscal 2023.
Shares of this Zacks Rank #3 (Hold) company have fallen 4.5% so far in the year compared with the industry’s decline of 7.2%.
3 Stocks Looking Red Hot
We have highlighted three better-ranked stocks, namely Dollar Tree (DLTR - Free Report) , Sysco Corporation (SYY - Free Report) and Kroger (KR - Free Report) .
Dollar Tree, which operates discount variety retail stores, flaunts a Zacks Rank #1 (Strong Buy) at present. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago reported numbers. DLTR has an expected EPS growth rate of 15.5% for three-five years.
Sysco Corporation, which is engaged in the marketing and distribution of various food and related products, sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Sysco Corporation’s current financial year sales and EPS suggests growth of 32.5% and 124.3%, respectively, from the year-ago period. SYY has an expected EPS growth rate of 11% for three-five years.
Kroger, the renowned grocery retailer, carries a Zacks Rank of 2 (Buy) at present. KR has an expected EPS growth rate of 11.3% for three-five years.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 6.7% and 6.3%, respectively, from the year-ago reported number. KR has a trailing four-quarter earnings surprise of 20.3%, on average.