Casey's General Stores Reports Tax Error, Shares Fall 8% - Analyst Blog

Shares of Casey's General Stores, Inc. (CASY) fell over 8% yesterday after the company reported an accounting error related to ethanol excise tax since 2012. This will lead to revision of all the financial statements for fiscal 2012, 2013, 2014 and the first quarter of fiscal 2015.

The error occurred following the expiry of a credit obtained from the federal government for blending ethanol with gasoline on Dec 31, 2011. Following the expiry, the company continued with the blending practice but accidently omitted paying taxes from Jan 1, 2012 till Jul 31, 2014.

Casey's detected the error during regular inspection and voluntarily reported it to the government. The company has already paid $30.4 million in taxes and $1.1 million in interest to Internal Revenue Service to solve the matter. Allocation of the same over the three fiscals is discussed below.

For 2012, tax error is calculated to be around $3.5 million and will reduce total earnings of $3.04 per share by 5 cents. For 2013, excise tax error is $11.3 million with $217,000 in interest. This will reduce total earnings of $2.86 per share by 17 cents.  For 2014, tax error would be $12.3 million with interest of $645,000 resulting in a 20 cents reduction from total earnings of $3.46 per share. For the first quarter of fiscal 2015, tax error of $3.3 million along with interest of $207,000 will reduce earnings per share of $1.34 by 6 cents.

The convenience store operator, which competes with TravelCenters of America LLC (TA) and The Pantry, Inc. (PTRY), has stressed on the fact that the tax error would not thwart any of its financial goals for 2015 and it will continue to pay its quarterly dividend of 20 cents unabated. The retailer added that it will now more stringently control its accounting and tax calculations to ensure that such incidents are not repeated.  

Casey's is currently a Zacks Rank #3 (Hold) stock. Another better performing retail stock worth consideration is Citi Trends, Inc. (CTRN) which carries a Zacks Rank #2 (Buy).