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Category: Stock Market and Casey's
Date: 10 September 2019 Stock Price: $167.30 We take a look at the 1st quarter earnings release of their 2020 fiscal year of Casey's General Stores on of the biggest general store groups in the USA.
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About Casey's General Stores
Headquartered in Ankeny, Iowa, Casey's General Stores, Inc. operates more than 2,000 convenience stores in 16 Midwestern states. Casey's offers self-service gasoline, a wide selection of grocery items and an array of freshly prepared food items. Among the most popular of Casey's prepared foods are their made-from-scratch pizzas, donuts, subs and sandwiches. Casey's operates from two company distribution centers, enabling an approximate delivery of 90% of in-store products as well as 75% of fuel.
The first store opened in 1968 in Boone, Iowa. In the years following, Casey's found success by opening stores in other small towns across Iowa. Approximately 57% of Casey's stores are still found in areas with populations of 5,000 or less. In contrast, roughly 17% of Casey's are now located in areas with populations of 20,000 or more. Casey's has a strong balance sheet and owns nearly all of its assets, which allows the company to consistently take advantage of growth opportunities.
The first store opened in 1968 in Boone, Iowa. In the years following, Casey's found success by opening stores in other small towns across Iowa. Approximately 57% of Casey's stores are still found in areas with populations of 5,000 or less. In contrast, roughly 17% of Casey's are now located in areas with populations of 20,000 or more. Casey's has a strong balance sheet and owns nearly all of its assets, which allows the company to consistently take advantage of growth opportunities.
Financial overview of Casey's General Stores latest earnings report
The numbers we are interested in (for the quarter):
- Total Revenue: $2.626 billion (up from $2.588 billion for the same quarter of the previous year)
- Cost of goods sold: $2.061 billion (down from $2.067 billion for the same quarter of the previous year)
- Net income: $85.815 million (up from $70.244 million for the same quarter of the previous year)
- Diluted income per share: $2.31 (up from $1.90 for the same quarter of the previous year)
- PE ratio: 18.2 (based on the earnings for this quarter being repeated for the full fiscal 2020)
- Dividend declared: $0.32
- Dividend yield: 0.76% (if the dividend declared this quarter is paid in each quarter of their fiscal 2020)
- Diluted number of shares outstanding: 37.085 million (up from 36.980 million for the same quarter of the previous year)
- Cash and cash equivalents: $96.773 million
- Cash and cash equivalents per share: $2.65
- Cash and cash equivalents makes up 2.52% of Casey's total assets
- Cash and cash equivalents makes up 1.58% of Casey's current market capital
- Receivables: $39.554 million
- Trade receivables makes up 1.03% of Casey's total assets
- Inventories: $273.755 million
- Inventories makes up 7.13% of Casey's total assets
- Stockholders equity: $1.489 billion
- Stockholders equity per share: $40.15
- Stock trading at 4 times its stockholders equity per share
Casey's General Stores' management commentary on the results and earnings guidance
ANKENY, Iowa--(BUSINESS WIRE)-- Casey’s General Stores, Inc. (“Casey’s” or the “Company”) (Nasdaq symbol CASY) today reported diluted earnings per share of $2.31 for the first quarter of fiscal year 2020 ended July 31, 2019, compared to $1.90 per share for the same quarter a year ago, representing 22% growth compared to last year. "Quarterly results were positively impacted by our fuel price optimization initiative, store growth, and a continued focus on controlling operating expenses," said Darren Rebelez, President and Chief Executive Officer. "As we look ahead, we remain optimistic our long-term strategy, including the value creation plan initiatives, will generate additional shareholder value."
Fuel - For the quarter, average fuel margin was 24.4 cents per gallon, while same-store gallons sold were down 2.0%. "The combination of our price optimization efforts along with a favorable fuel margin environment allowed us to grow gross profit dollars by over 22% for the quarter," said Rebelez. "We are excited about the advancements made with the fuel price optimization tool. We have gained significant agility to capture additional fuel margin while maintaining a competitive pricing structure." Total gallons sold for the quarter were up 2.9% to 619.1 million gallons while gross profit dollars increased to $151.0 million.
Grocery and Other Merchandise - For the quarter, same-store sales were up 3.2% with average margin of 31.3%. Average margin was adversely impacted by a $6.6 million out-of-period inventory adjustment, which, if excluded, would have resulted in average margin of 32.3%. "We are encouraged by the momentum in this category and are optimistic about the expected impact of our current roll out of the inside store price optimization tool," said Rebelez. For the first quarter, total grocery and other merchandise revenue increased 6.7% to $687.9 million, and gross profit dollars increased to $215.5 million.
Prepared Food and Fountain - Same-store sales for the quarter were up 1.6% with average margin of 62.2%. "As we continue our digital transformation journey, we are highly focused on the pricing and promotional capabilities we are adding," said Rebelez. "We believe the previously launched e-commerce website and new mobile app, when combined with our future loyalty program, will significantly enhance the overall guest experience." Total prepared food and fountain revenue increased 5.3% to $295.9 million in the first quarter while gross profit dollars grew to $184.0 million.
Operating Expenses - For the first quarter, total operating expenses increased 5.7% to $379.8 million. The increase in total operating expenses was primarily attributable to operating 76 more stores than the same quarter in the prior year. Same-store operating expenses excluding credit card fees were up 2.5% for the quarter. "We continue to emphasize at all levels of the company the importance of maintaining strong discipline over operating expenses," noted Rebelez. "We will remain focused on identifying additional opportunities to improve expense management throughout the fiscal year."
The Company has 11 acquisition stores under agreement to purchase and a new store pipeline of 107 sites, including 35 under construction as of July 31, 2019. "Development plans are underway for a third distribution center, which is scheduled to break ground in the southwest part of our territory later this year," said Rebelez. "Upon completion, this will provide immediate cost savings and support our future expansion strategy."
Share Repurchase Program
The Company has $300 million remaining on its authorization from March 2018. There were no repurchases made against that authorization in the first quarter.
Dividend
At its September meeting, the Board of Directors declared a quarterly dividend of $0.32 per share. The dividend is payable November 15, 2019 to shareholders of record on November 1, 2019.
Fiscal guidance
The image below shows the fiscal guidance for 2020 for Casey's
Fuel - For the quarter, average fuel margin was 24.4 cents per gallon, while same-store gallons sold were down 2.0%. "The combination of our price optimization efforts along with a favorable fuel margin environment allowed us to grow gross profit dollars by over 22% for the quarter," said Rebelez. "We are excited about the advancements made with the fuel price optimization tool. We have gained significant agility to capture additional fuel margin while maintaining a competitive pricing structure." Total gallons sold for the quarter were up 2.9% to 619.1 million gallons while gross profit dollars increased to $151.0 million.
Grocery and Other Merchandise - For the quarter, same-store sales were up 3.2% with average margin of 31.3%. Average margin was adversely impacted by a $6.6 million out-of-period inventory adjustment, which, if excluded, would have resulted in average margin of 32.3%. "We are encouraged by the momentum in this category and are optimistic about the expected impact of our current roll out of the inside store price optimization tool," said Rebelez. For the first quarter, total grocery and other merchandise revenue increased 6.7% to $687.9 million, and gross profit dollars increased to $215.5 million.
Prepared Food and Fountain - Same-store sales for the quarter were up 1.6% with average margin of 62.2%. "As we continue our digital transformation journey, we are highly focused on the pricing and promotional capabilities we are adding," said Rebelez. "We believe the previously launched e-commerce website and new mobile app, when combined with our future loyalty program, will significantly enhance the overall guest experience." Total prepared food and fountain revenue increased 5.3% to $295.9 million in the first quarter while gross profit dollars grew to $184.0 million.
Operating Expenses - For the first quarter, total operating expenses increased 5.7% to $379.8 million. The increase in total operating expenses was primarily attributable to operating 76 more stores than the same quarter in the prior year. Same-store operating expenses excluding credit card fees were up 2.5% for the quarter. "We continue to emphasize at all levels of the company the importance of maintaining strong discipline over operating expenses," noted Rebelez. "We will remain focused on identifying additional opportunities to improve expense management throughout the fiscal year."
The Company has 11 acquisition stores under agreement to purchase and a new store pipeline of 107 sites, including 35 under construction as of July 31, 2019. "Development plans are underway for a third distribution center, which is scheduled to break ground in the southwest part of our territory later this year," said Rebelez. "Upon completion, this will provide immediate cost savings and support our future expansion strategy."
Share Repurchase Program
The Company has $300 million remaining on its authorization from March 2018. There were no repurchases made against that authorization in the first quarter.
Dividend
At its September meeting, the Board of Directors declared a quarterly dividend of $0.32 per share. The dividend is payable November 15, 2019 to shareholders of record on November 1, 2019.
Fiscal guidance
The image below shows the fiscal guidance for 2020 for Casey's
Casey's General Stores (NASDAQ: CASY) stock price history
The image below shows the stock price history of Casey's over the last 5 years. And its been a very good time for the group. With stockholders being handsomely rewarded during the last 5 years. 5 years ago the stock was trading at around $69 and its currently trading at $167.30. Thats a whopping 142% return over the last 5 years. In addition to this Casey's is trading at close to its 52 week high and is far from its 52 week low which shows that short term momentum and sentiment towards the group is positive.
Recent coverage of Casey's General Stores
The extract below was obtained from Zacks.
Casey's General Stores (CASY) came out with quarterly earnings of $2.31 per share, beating the Zacks Consensus Estimate of $2.05 per share. This compares to earnings of $1.90 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 12.68%. A quarter ago, it was expected that this convenience store chain would post earnings of $0.42 per share when it actually produced earnings of $0.68, delivering a surprise of 61.90%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Casey's, which belongs to the Zacks Retail - Convenience Stores industry, posted revenues of $2.63 billion for the quarter ended July 2019, surpassing the Zacks Consensus Estimate by 0.82%. This compares to year-ago revenues of $2.59 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Casey's shares have added about 32.1% since the beginning of the year versus the S&P 500's gain of 18.8%
Read the full article published on Zacks here.
Casey's General Stores (CASY) came out with quarterly earnings of $2.31 per share, beating the Zacks Consensus Estimate of $2.05 per share. This compares to earnings of $1.90 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 12.68%. A quarter ago, it was expected that this convenience store chain would post earnings of $0.42 per share when it actually produced earnings of $0.68, delivering a surprise of 61.90%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Casey's, which belongs to the Zacks Retail - Convenience Stores industry, posted revenues of $2.63 billion for the quarter ended July 2019, surpassing the Zacks Consensus Estimate by 0.82%. This compares to year-ago revenues of $2.59 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Casey's shares have added about 32.1% since the beginning of the year versus the S&P 500's gain of 18.8%
Read the full article published on Zacks here.
Casey's General Stores (NASDAQ: CASY) latest stock valuation
So based on Casey's latest earnings report what are Casey's General Stores stock worth? Based on the earnings report and fiscal guidance provided by Casey's General Stores our valuation models has a target (full value) price on Casey's General Stores of $161.50 a stock. We therefore believe the stock is full priced to a little overvalued at its current price. We suggest looking to buy into Casey's General Stores of at least 10% below our target price. So a suggested entry price is closer to $145 a stock.