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Casey's (CASY) to Report Q2 Earnings: What's in the Cards?

Zacks Equity Research

Casey's General Stores, Inc. CASY is likely to have registered improvement in the bottom line when it reports second-quarter fiscal 2020 numbers. Notably, this operator of convenience stores had reported solid earnings and comfortably surpassed the Zacks Consensus Estimate in the preceding four quarters by 30.2%, on average. In the last reported quarter, the company delivered positive earnings surprise of 12.7%.

For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is currently pegged at $2.12, suggesting an improvement of 17.8% from the year-ago quarter’s reported figure. We note that the consensus mark has remained unchanged in the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $2,563 million, indicating an increase of 1% from the year-ago period.

We note that the top and bottom lines increased 1.5% and 21.6%, respectively, in the last reported quarter.

Key Factors to Note

Casey's has been benefiting from its Value Creation Plan. This includes new fleet card program, price and product optimization, digital engagements comprising mobile app and online ordering capabilities, cost containment efforts as well as capital reallocation plan.

Also, management has been focusing on improving distribution efficiency. The company has launched the new Casey’s.com e-commerce website, rolled out new mobile app, initiated fuel price optimization platform across all outlets.

Cumulatively, these have been aiding the company’s top and bottom-line performance. Notably, the Zacks Consensus Estimate for revenues for Grocery & Other Merchandise and Prepared Food & Fountain suggests an increase of 7.9% and 7% to $667 million and $303 million, respectively, for the quarter-to-be-reported. However, the consensus mark for Fuel sales indicates a decline of 3.1% to $1,571 million.

We note that the company has been grappling with soft fuel gallons same-store sales. The Zacks Consensus Estimate for the metric calls for a decline of 1% for the quarter under review. Nevertheless, same-store sales for Grocery & Other Merchandise and Prepared Food & Fountain suggest an increase of 3.9% and 2.9%, respectively.

We also remain concerned about higher operating expenses. Certainly, any increase in operating expenses may weigh on margins. Further, any rise in wholesale fuel costs and higher input costs is a concern.

Casey's General Stores, Inc. Price, Consensus and EPS Surprise

Casey's General Stores, Inc. Price, Consensus and EPS Surprise
Casey's General Stores, Inc. Price, Consensus and EPS Surprise

Casey's General Stores, Inc. price-consensus-eps-surprise-chart | Casey's General Stores, Inc. Quote

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What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Casey's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Casey's carries a Zacks Rank #3 but has an Earnings ESP of 0.00%.

3 Stocks With Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Costco COST has an Earnings ESP of +1.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group GIII has an Earnings ESP of +0.94% and a Zacks Rank #3.

Big Lots BIG has an Earnings ESP of +3.85% and a Zacks Rank #3.

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Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
 
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Big Lots, Inc. (BIG) : Free Stock Analysis Report
 
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