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Here's How Casey's (CASY) Looks Just Ahead of Q3 Earnings

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Casey's General Stores, Inc. (CASY - Free Report) is likely to report a year-over-year decline in the bottom line when it releases third-quarter fiscal 2020 results. Nonetheless, this convenience store operator delivered a positive earnings surprise of 5.2% in the last reported quarter. Moreover, the company’s earnings have outperformed the Zacks Consensus Estimate by 27.4%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for third-quarter earnings has dropped by a penny over the past 30 days to 87 cents per share. This suggests a decline of 23% from the year-ago period’s reported figure. Nonetheless, the consensus mark for revenues is pegged at $2,290 million, indicating a rise of 11.8% from the figure reported in the year-ago quarter.

Key Factors to Note

The company has been grappling with soft fuel gallons same-store sales. Fuel sales are a significant part of Casey’s overall revenues. We note that fuel sales fell 6.6% during the second quarter of fiscal 2020, wherein fuel gallons same-store sales decreased 1.8%. In the last earnings call, management guided fuel gallons same-store sales growth of negative 1% to positive 0.5% in fiscal 2020. Apart from this, elevated operating costs have been a headwind for Casey’s. The company anticipates a 7-9% rise in operating expenses for fiscal 2020. These hurdles are likely to have impacted results in the quarter under review.

Nonetheless, Casey's focus on the value creation plan to improve sales and profitability bodes well. This includes a new fleet card program, price and product optimization, loyalty program, digital engagements comprising mobile app and online ordering capabilities, cost containment efforts and capital reallocation plan. Management is also focusing on improving distribution efficiency.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Casey's this season. 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 +3.45%.

Other Stocks With Favorable Combinations

Here are some 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 - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Five Below (FIVE - Free Report) has an Earnings ESP of +0.32% and a Zacks Rank #3.

Fastenal Company (FAST - Free Report) has an Earnings ESP of +1.85% and a Zacks Rank #3.

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