Casey's General Stores Inc.

Casey's General Stores Inc. (CASY - Snapshot Report) saw same store sales rise 6.4% in the fiscal first quarter thanks to better gasoline margins. The company has surprised on estimates 2 out of the last 4 quarters by an average of 17.50%. CASY is trading with a forward P/E of 14.42.

Company Description

Casey's General Stores, founded in 1959 in Iowa, operates convenience stores affiliated with gas stations in small towns across the United States. As of March 31, the company operated 1474 stores.

Casey's Saw Record Fiscal First Quarter

On Sep 8, Casey's General Stores reported fiscal first quarter 2010 earnings that blew by the Zacks Consensus Estimate by 45%. Earnings per share were 87 cents which easily surprised on the Zacks Consensus Estimate of 60 cents and bested the year ago quarter by 50%.

The company attributed the record quarter to strong gas margins and enhanced profitability inside the stores.

Same-store gasoline gallons sold rose 3.2% with an average margin of 15.7 cents per gallon even as the average retail price per gallon was down 38% from a year ago.

Margins also increased on same store sales to 34.3% compared to 34% in the year ago quarter. Same-store sales, while up 6.4%, were under the company's goal of 8.9%. The cold summer hurt beer and beverage sales.

The company continued to expand its coffee and fountain drink offerings and its made-to-order sub sandwich program. A decline in the cost of cheese compared to a year ago boosted profit.

Expansion plans continue as the company opened 5 newly constructed stores and replaced another 5 stores. There were no acquired stores opened during the quarter. The company still anticipates expanding the number of stores by 4% by the end of fiscal 2010.

Zacks Consensus Estimates Rise

Covering analysts are optimistic about the second quarter and the full year given the better than expected second quarter results.

The second quarter Zacks Consensus Estimate rose 3 cents in the last 7 days with 4 out of 6 analysts raising during that period.

For fiscal 2010, the Zacks Consensus Estimate jumped 9.2% to $2.14 from $1.96 per share as 3 out of 6 analysts adjusted their estimates higher in the last week.

Value Fundamentals

Casey's General Stores is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 2.17. The company also has a solid 5-year average return on equity (ROE) of 11.58%.

As an added bonus, the company also pays a dividend, which it just raised in June, with a current yield of 1.10%.