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Casey's (CASY) Q4 Earnings Miss Estimates, Revenues Down Y/Y

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Shares of Casey's General Stores, Inc. (CASY - Free Report) dropped 4.5% during the after-market trading session on Jun 6 following the company’s fourth-quarter fiscal 2023 results. Both the top and bottom lines fell short of the Zacks Consensus Estimate and declined year over year.

A Closer Look at Results

Casey's, one of the leading convenience store chains in the United States, posted quarterly earnings of $1.49 per share, which missed the Zacks Consensus Estimate of $1.58 and decreased from earnings of $1.60 reported in the prior-year period.

Total revenues of $3,328.7 million decreased 3.8% year over year and missed the Zacks Consensus Estimate of $3,404 million. This was the fourth straight sales miss.

Inside sales jumped 8.4% to $1,124.1 million during the quarter. Inside same-store sales increased 6.5% compared with a 5.2% rise registered in the year-ago period. This was driven by stellar performance in non-alcoholic and alcoholic beverages in the grocery and general merchandise category as well as bakery and hot food in the prepared food and dispensed beverage category.

Margins & Expenses

The gross profit increased 4.7% year over year to $687.8 million due to a decline in the cost of goods sold. The gross margin expanded 170 basis points to 20.7%. Inside gross profit grew 8.9% to $445.5 million. Meanwhile, the inside margin increased 20 basis points to 39.6%.

Adjusted EBITDA increased marginally by 0.9% year over year to $166.9 million during the quarter under discussion. This can be attributed to the higher inside gross profit, partly offset by higher operating expenses and a lower fuel gross profit.

Casey's witnessed an increase of 6.3% in operating expenses of $521.7 million. The metric increased for operating 69 more stores compared with the same period last year.

Performance by Categories

We note that Fuel sales decreased 8.8% year over year to $2,137.8 million during the quarter. Fuel gallons sold jumped 2.4% to 635.9 million.

Fuel gallons same-store sales were flat during the quarter under discussion compared with a 1.5% increase in the year-ago period. Fuel gross profit fell 2.2% to $219.7 million due to a decrease of 1.6 cents per gallon, partly offset by an increase in the total fuel gallons sold. We note that the fuel margin decreased to 34.6 cents per gallon from 36.2 cents per gallon in the prior-year period.

Grocery & General Merchandise sales rose 8.8% to $809.8 million during the quarter. Same-store sales increased 7.1% compared with 4.3% growth in the year-ago quarter. Grocery & General Merchandise margin increased to 33% from 32.5% in the year-ago period.

Prepared Food & Dispensed Beverage sales rose 7.1% to $314.2 million. Same-store sales increased 4.9% compared with 7.6% in the year-ago quarter. Prepared Food & Dispensed Beverage margin contracted 10 bps to 56.8%.

Store Update

As of Apr 30, 2023, the company operated 2,521 stores. Casey's expects to add approximately 110 stores in fiscal 2024. The company added 81 new stores in fiscal 2023.

Other Financial Aspects

Casey's ended the quarter with cash and cash equivalents of $378.9 million, long-term debt and finance lease obligations (net of current maturities) of $1,620.5 million and shareholders’ equity of $2,660.7 million.

During the quarter, Casey's did not make any share repurchases. The company has $400 million remaining under its existing share repurchase authorization.

FY24 Outlook

For fiscal 2024, Casey's estimates inside same-store sales to increase between 3% and 5% and the inside margin in the band of 40%-41%. Management foresees same-store fuel gallons sold between negative 1% and positive 1%. It anticipates total operating expenses to increase approximately 5% to 7%. The company expects to invest roughly $500 million to $550 million in fiscal 2024.

Shares of this Zacks Rank #2 (Buy) company have advanced 13.3% in the past year, in tandem with the industry’s growth.

Other Picks You Can’t Miss Out On

Here we have highlighted three other top-ranked stocks, namely Urban Outfitters (URBN - Free Report) , The TJX Companies (TJX - Free Report) and Walmart (WMT - Free Report) .

Urban Outfitters, a leading lifestyle product and services company, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 18%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year revenues and EPS suggests growth of 4.9% and 53.7%, respectively, from the year-ago reported figure. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.

TJX Companies, which operates as an off-price apparel and home fashion retailer, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.

The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 14.5% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 4.4%, on average.

Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.

The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.

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