• LisaS

Will The Value Creation Plan by CASEY'S General Store Pan Out? ($CASY)

Updated: Oct 19

Consensus EPS Estimate for FQ1 2020 is $2.03 (+21.18% YoY)

Consensus Revenue Estimate for FQ1 2020 is $2.59B (+0.24% YoY)

EPS revisions past 90 days include 6 upward and 0 downward.

Revenue revisions past 90 days include 3 upward and 4 downward.

Casey’s General Stores report Q1 2020 earnings on Monday 9/9/19 AMC. The company operates convenience stores that operate in 16 Midwestern states and has a long history of reporting solid results and increasing its dividend. Last quarter CASY had a power gap up after it reported Q4 2019 EPS of $.68/sh, a solid $.26/sh above consensus estimates of $.42/sh.

The stock is up over 26% for the quarter and 32% YTD, so heading into earnings it appears fully valued. It was downgraded in August by RBC Capital Markets to an Underperform and by Gabelli & Co to a hold based on valuation and skepticism that the weakening farm economy it operates within remains a headwind for it over the next year.

Despite these rational arguments we are not inclined to bet on the downside for CASY because 7 out of the last 8 quarters it reported the stock moved higher. We stand neutral heading into earnings. Watching for a post-earnings reaction play or possibly a smaller OTM lotto. CASY is considered a specialty retailer within the Consumer Discretionary segment.

Convenience stores tend to be fairly recession-proof in weakening economies. Both Zacks and EarningsWhispers scores imply/expect CASY to beat estimates. Last quarter CASY’s launched a fuel price optimization platform in all their stores and highlighted its new fleet card program. Thus, healthy fuel margins and the company’s consistent operational expense restraint is expected to be a driver of their performance. CASY is spending big bucks on a digital transformation as well which should assist in better quality earnings.

We currently are holding no positions, though may purchase positions in the future. Our opinion is to pass off on CASY's earnings until we observe more option flow.

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