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Factors Setting the Tone for Casey's (CASY) Q1 Earnings

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Casey's General Stores, Inc. (CASY - Free Report) is likely to register an increase in the top line when it reports first-quarter fiscal 2022 numbers on Sep 7, after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $3,051 million, indicating an improvement of 44.9% from the prior-year reported figure.

However, the bottom line of this operator of convenience stores is expected to decrease year over year. Although the Zacks Consensus Estimate for first-quarter earnings per share has increased 3% to $2.74 over the past seven days, the figure suggests a sharp decline from earnings of $3.24 in the year-ago period.

This Ankeny, IA-based company has a trailing four-quarter earnings surprise of 38.4%, on average. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by a margin of 67.2%.

Key Factors to Note

Casey's price and product optimization strategies, increased penetration of private brands, and digital engagements comprising mobile app and online ordering capabilities are commendable. The rollout of curbside pickup option and Casey’s reward program have been benefiting the overall performance. The company has been increasing online grocery items at all outlets. It has also partnered with DoorDash and Uber Eats for delivery services. Clearly, these factors are likely to have favorably impacted the company’s to-be-reported quarter’s top line.

Casey’s Grocery & Other Merchandise category is likely to have contributed to the company’s first-quarter top-line performance. The Zacks Consensus Estimate for sales for the category is pegged at $824 million, which suggests an increase of 12.6% from the prior-year reported figure. The consensus mark indicates a jump of 7.4% in same-store sales.

Again, the company’s Prepared Food and Fountain category may have positively impacted total revenues. The Zacks Consensus Estimate for sales for the category stands at $313 million, which indicates a jump of 15.6% from the prior-year reported figure. Also, the consensus mark suggests growth of 12.7% in same-store sales.

With the resumption of economic activities, things have started to improve. Remarkably, the Zacks Consensus Estimate suggest an increase of 20.3% in total gallons sold during the quarter under review. It indicates growth of 10.2% in fuel gallons same-store sales. As a result, sales at the Fuel category might have risen year over year. The Zacks Consensus Estimate for sales for the Fuel category is pegged at $1,902 million, which suggests year-over-year growth of 75.1%.

In spite of aforementioned tailwinds, concerns related to higher operating expenses cannot be ignored. This may be due to increased store-level operating hours and costs related to the ongoing pandemic. Also, any deleverage in commodity costs and wage pressures might have weighed on margins. On its last earnings call, management guided year-over-year decline in first-quarter fiscal 2022 earnings citing unfavorable fuel margin comparisons, higher operating expenses, and the closing costs related to Buchanan Energy.

Caseys General Stores, Inc. Price, Consensus and EPS Surprise

Caseys General Stores, Inc. Price, Consensus and EPS Surprise

Caseys General Stores, Inc. price-consensus-eps-surprise-chart | Caseys General Stores, Inc. Quote

What Does the Zacks Model Unveil?

Our proven model predicts 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 chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Casey's has a Zacks Rank #3 and an Earnings ESP of +3.56%.

3 More Stocks With Favorable Combination

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

lululemon athletica inc. (LULU - Free Report) has an Earnings ESP of +2.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kroger Co. (KR - Free Report) has an Earnings ESP of +1.36% and a Zacks Rank #2.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +0.58% and a Zacks Rank #2.