Casey’s Shares Fall on 3Q Business Update

Shares of Casey’s General Stores were down 2.3% in Wednesday’s early trading as the company announced an update on its performance in the third quarter of fiscal 2021.

The convenience store chain stated that on a quarter-to-date basis (through January 8, 2021), its same-store fuel gallons were down in the low to mid-teens range year-over-year. Meanwhile, Casey’s (CASY) quarter-to-date fuel margins remain higher than historical averages and are currently above $0.30 per gallon.

Coming to Inside stores same-store sales (include Grocery and Other Merchandise as well as Prepared Food and Fountain businesses), quarter-to-date numbers were up by low single-digits. Notably, Grocery and Other Merchandise same-store sales grew by mid-single digits, while the Prepared Food and Fountain business fell by mid-single digits.

Also, quarter-to-date operating expenses for 3Q were slightly higher than the increase recorded in the second quarter due to incremental costs associated with COVID-19.

Overall, the company stated that 3Q quarter-to-date results were generally in-line with its commentary on the 2Q earnings call. In December, Casey’s reported better-than-expected 2Q results even though revenue fell 11% to $2.22 billion due to lower retail fuel sales. Meanwhile, 2Q EPS increased 36% to $3.00, driven by higher fuel margin and increased Inside stores gross profit. (See CASY stock analysis on TipRanks)

Additionally, the company stated that with regards to its pending Buchanan Energy acquisition, Casey’s and Buchanan Energy received a request for additional information from the Federal Trade Commission. The company had initially expected the transaction to close in late 2020 but this request extends the anticipated closing date. Casey’s said that it continues to cooperate with the FTC and “does not expect its review to have a material impact on the acquisition.”

Currently, Casey’s scores a Moderate Buy analyst consensus based on 6 Buys and 3 Holds. The average price target of $215.13 indicates upside potential of about 16% from current levels. Shares have gained 10.5% over the past year.

Last month, Deutsche Bank analyst Paul Trussell increased the price target on Casey’s to $220 from $218 and reiterated a Buy rating. The analyst argued that the company delivered another quarterly earnings beat with strong fuel profitability, but the results “somewhat underwhelmed” investors as the magnitude of the beat was smaller compared to previous quarters.

Meanwhile, TipRanks’ Hedge Funds Trading Activity tool shows that confidence in Casey’s is currently Very Positive, with 7 hedge funds increasing their cumulative holdings in CASY shares by 43.3K in the last quarter.

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