We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Casey's (CASY) Down 11.1% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
It has been about a month since the last earnings report for Casey's General Stores (CASY - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Casey's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Casey's Q2 Earnings Beat, Revenues Miss Estimates
Casey's reported second-quarter fiscal 2023 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line lagged the same. However, both metrics improved year over year. Results gained from prepared food and dispensed beverages, most notably pizza and fountain sales, as well as strength in grocery and general merchandise in both alcoholic and non-alcoholic beverages.
A Closer Look at Results
Casey's, one of the leading convenience store chains in the United States, posted quarterly earnings of $3.67 per share, which beat the Zacks Consensus Estimate of $3.27 and improved 42% from the $2.59 reported in the prior-year period.
The year-over-year jump in the bottom line can be attributed to higher profitability in fuel and inside the store. This was partly offset by an increase in operating expenses, driven primarily by operating 83 more stores than a year ago, as well as an increase in credit card fees resulting from the record-high retail price of fuel.
Total revenues of $3,978.6 million missed the Zacks Consensus Estimate of $4,151 million but advanced 22% year over year. Revenues grew across all categories.
Inside sales jumped 11.4% to $1,268.4 million during the quarter. This increase was driven by the stellar performance in prepared food items, including pizza slices and whole pies, as well as non-alcoholic and alcoholic beverages, snacks and candy from the grocery and general merchandise category.
Inside same-store sales increased 7.9% compared with a 6% rise registered in the year-ago period. The metric grew 14.4% on a two-year basis.
Margins & Expenses
The gross profit increased 13% year over year to $810.9 million due to higher revenues. However, the gross margin contracted 160 basis points (bps) to 20.4%. Inside gross profit grew 8.9% to $504.5 million. Meanwhile, the inside margin shrunk 90 bps to 39.8%.
Adjusted EBITDA increased 27.3% year over year to $276.3 million during the quarter under discussion.
Casey's witnessed an increase of 7.7% in operating expenses of $539.2 million. The metric increased for operating 83 more stores compared with the same period last year and a rise in same-store credit card fees due to a jump in retail fuel prices.
Performance by Categories
We note that Fuel sales surged 28.7% year over year to $2,635.9 million during the quarter but came below our estimate of $2,676.2 million. Fuel gallons sold jumped 5% to 702 million due to the increase in the store count.
Fuel gallons same-store sales inched up 0.3% during the quarter under discussion compared with a 2.5% increase in the year-ago period as volumes were impacted by the high retail fuel price. Fuel gross profit rose 22.7% to $284.4 million, given the favorable environment due to declining wholesale costs. We note that the fuel margin increased to 40.5 cents per gallon from 34.7 cents per gallon in the prior-year period.
Grocery & General Merchandise sales rose 10.6% to $917.2 million during the quarter driven by the robust sales of non-alcoholic and alcoholic beverages. The figure also came ahead of our estimate of $788.9 million. Same-store sales increased 6.9% compared with 6.8% growth in the year-ago quarter. Grocery & General Merchandise margin remained flat year over year at 33.3%. Again, the gross profit increased 11% to $305.3 million during the quarter.
Prepared Food & Dispensed Beverage sales rose 13.5% to $351.3 million and beat our estimate of $325.5 million driven by the increased sales of pizza slices and whole pies. Same-store sales increased 10.5% compared with 4.1% in the year-ago quarter. Prepared Food & Dispensed Beverage’s gross profit jumped 6.3% year over year to $199.2 million while the margin contracted 390 bps to 56.7%.
Store Update
Casey's constructed nine new stores, acquired three stores and closed one in the reported quarter. As of Oct 31, 2022, it operated 2,463 stores. The company expects to add approximately 80 stores in fiscal 2023.
Other Financial Aspects
Casey's ended the quarter with cash and cash equivalents of $414.8 million, long-term debt and finance lease obligations (net of current maturities) of $1,639.6 million and shareholders’ equity of $2,512.8 million. As of Oct 31, 2022, CASY had $884 million in available liquidity.
During the quarter, Casey's did not make any share repurchases. The company has $400 million remaining under its existing share repurchase authorization. Meanwhile, it approved a quarterly dividend of 38 cents to be payable on Feb 15, 2023, to shareholders of record on Feb 1, 2023.
FY23 Outlook
For fiscal 2023, Casey's now estimates fiscal 2023 same-store inside sales to increase 5-7%, up from the prior view of 4-6%. The company continues to envision an inside margin of about 40% and same-store fuel gallon projection to be flat to up 2%.
Casey's now expects operating expenses to be in the lower range of the earlier guided view of approximately 9-10%. The company expects to invest roughly $450-$500 million in plant and equipment in the fiscal year. The tax rate is likely to be 24-25%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Casey's has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Casey's has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Casey's (CASY) Down 11.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Casey's General Stores (CASY - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Casey's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Casey's Q2 Earnings Beat, Revenues Miss Estimates
Casey's reported second-quarter fiscal 2023 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line lagged the same. However, both metrics improved year over year. Results gained from prepared food and dispensed beverages, most notably pizza and fountain sales, as well as strength in grocery and general merchandise in both alcoholic and non-alcoholic beverages.
A Closer Look at Results
Casey's, one of the leading convenience store chains in the United States, posted quarterly earnings of $3.67 per share, which beat the Zacks Consensus Estimate of $3.27 and improved 42% from the $2.59 reported in the prior-year period.
The year-over-year jump in the bottom line can be attributed to higher profitability in fuel and inside the store. This was partly offset by an increase in operating expenses, driven primarily by operating 83 more stores than a year ago, as well as an increase in credit card fees resulting from the record-high retail price of fuel.
Total revenues of $3,978.6 million missed the Zacks Consensus Estimate of $4,151 million but advanced 22% year over year. Revenues grew across all categories.
Inside sales jumped 11.4% to $1,268.4 million during the quarter. This increase was driven by the stellar performance in prepared food items, including pizza slices and whole pies, as well as non-alcoholic and alcoholic beverages, snacks and candy from the grocery and general merchandise category.
Inside same-store sales increased 7.9% compared with a 6% rise registered in the year-ago period. The metric grew 14.4% on a two-year basis.
Margins & Expenses
The gross profit increased 13% year over year to $810.9 million due to higher revenues. However, the gross margin contracted 160 basis points (bps) to 20.4%. Inside gross profit grew 8.9% to $504.5 million. Meanwhile, the inside margin shrunk 90 bps to 39.8%.
Adjusted EBITDA increased 27.3% year over year to $276.3 million during the quarter under discussion.
Casey's witnessed an increase of 7.7% in operating expenses of $539.2 million. The metric increased for operating 83 more stores compared with the same period last year and a rise in same-store credit card fees due to a jump in retail fuel prices.
Performance by Categories
We note that Fuel sales surged 28.7% year over year to $2,635.9 million during the quarter but came below our estimate of $2,676.2 million. Fuel gallons sold jumped 5% to 702 million due to the increase in the store count.
Fuel gallons same-store sales inched up 0.3% during the quarter under discussion compared with a 2.5% increase in the year-ago period as volumes were impacted by the high retail fuel price. Fuel gross profit rose 22.7% to $284.4 million, given the favorable environment due to declining wholesale costs. We note that the fuel margin increased to 40.5 cents per gallon from 34.7 cents per gallon in the prior-year period.
Grocery & General Merchandise sales rose 10.6% to $917.2 million during the quarter driven by the robust sales of non-alcoholic and alcoholic beverages. The figure also came ahead of our estimate of $788.9 million. Same-store sales increased 6.9% compared with 6.8% growth in the year-ago quarter. Grocery & General Merchandise margin remained flat year over year at 33.3%. Again, the gross profit increased 11% to $305.3 million during the quarter.
Prepared Food & Dispensed Beverage sales rose 13.5% to $351.3 million and beat our estimate of $325.5 million driven by the increased sales of pizza slices and whole pies. Same-store sales increased 10.5% compared with 4.1% in the year-ago quarter. Prepared Food & Dispensed Beverage’s gross profit jumped 6.3% year over year to $199.2 million while the margin contracted 390 bps to 56.7%.
Store Update
Casey's constructed nine new stores, acquired three stores and closed one in the reported quarter. As of Oct 31, 2022, it operated 2,463 stores. The company expects to add approximately 80 stores in fiscal 2023.
Other Financial Aspects
Casey's ended the quarter with cash and cash equivalents of $414.8 million, long-term debt and finance lease obligations (net of current maturities) of $1,639.6 million and shareholders’ equity of $2,512.8 million. As of Oct 31, 2022, CASY had $884 million in available liquidity.
During the quarter, Casey's did not make any share repurchases. The company has $400 million remaining under its existing share repurchase authorization. Meanwhile, it approved a quarterly dividend of 38 cents to be payable on Feb 15, 2023, to shareholders of record on Feb 1, 2023.
FY23 Outlook
For fiscal 2023, Casey's now estimates fiscal 2023 same-store inside sales to increase 5-7%, up from the prior view of 4-6%. The company continues to envision an inside margin of about 40% and same-store fuel gallon projection to be flat to up 2%.
Casey's now expects operating expenses to be in the lower range of the earlier guided view of approximately 9-10%. The company expects to invest roughly $450-$500 million in plant and equipment in the fiscal year. The tax rate is likely to be 24-25%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Casey's has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Casey's has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.