CASY - Casey's General Stores shoots higher after investors shake off earnings jitters

2023-03-08 10:57:10 ET

Casey's General Stores ( NASDAQ: CASY ) poked out a 3.95% gain in morning trading on Wednesday after posting a mixed FQ3 earnings report. Investors had showed pre-earnings jitters on Casey's with the stock down almost 7% over the last six weeks,

Inside same-store sales increased 5.6% year-over-year and were up 13.6% on a two-year stack basis. Casey's ( CASY ) said the inside same-store sales were spurred by grocery and general merchandise, notably non-alcoholic and alcoholic beverages, snacks, and candy. Prepared food and dispensed beverage also performed well due to strong pizza slice and donut sales. Grocery and general merchandise margin increased by approximately 200 basis points compared to a year ago, primarily due to a favorable mix shift to higher margin items like energy drinks and candy, as well as private label products, while higher prepared food and dispensed beverage ingredient costs continued to pressure gross profit margin relative to the prior year. Outside of Casey's stores, same-store fuel gallons were down 0.5% during the quarter compared to prior year with a fuel margin of $0.407 per gallon. Casey's total fuel gross profit was up 10.4% from a year ago with a higher fuel margin padding the results.

Adjusted EBITDA was $222.9M vs. $174.4M a year ago.

Looking ahead, the retailer now sees same-store inside sales growth of 6% to 7%.

On Wall Street, RBC Capital boosted its price target on Casey's General Stores ( CASY ) to $273 from $268. For its part, Wells Fargo reiterated an Overweight rating on Casey's saying it came away impressed by the update. "Despite some expectation for a nonevent tonight, CASY surprised to the upside and the stock certainly deserves to trade higher, especially given underperformance since the pre-announcement (-11% vs. SPX -2%)," noted analyst Anthony Bonadio. The firm still sees room for upside to consensus CASY estimates and would recommended that investors snap up more shares.

The Seeking Alpha Quant Rating on Casey's General Stores is Hold.

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