Skip to main content

Market Overview

Don't Be Hasty To Dump Casey's, Deutsche Bank Says Long-Term Outlook Still Positive

Don't Be Hasty To Dump Casey's, Deutsche Bank Says Long-Term Outlook Still Positive

Shares of Casey's General Stores Inc (NASDAQ: CASY) were trading lower by more than 7 percent Tuesday morning after the company's fiscal fourth-quarter earnings report disappointed the Street. Despite the miss, investors looking to cut their losses should consider what analysts at Deutsche Bank have to say.

Deutsche Bank's Shane Higgins maintains a Buy rating on Casey's stock with an unchanged $120 price target as the analyst's longer-term bullish outlook remains unchanged.

Q4 Positives

The convenience store chain's earnings report contained nine notable positive aspects, including:

    1. Gasoline comps and grocery comps on a two- and three-year stack showed signs of stability.
    2. Gallon comp fell just 0.5 percent versus the analyst's expectations of a 1.0 percent decline.
    3. Fuel gallons rose 3.0 percent, which exceeded the analyst's expectations of a 2.7 percent gain.
    4. Fuel gross profit of $85.6 million came in better than the $84.1 million expected.
    5. Grocery comp of 1.5 percent was 0.5 percentage points better than expected.
    6. Prepared Food comp of 3.2 percent exceeded expectations for 2.5 percent growth.
    7. Prepared Food gross profit of $143.8 million was roughly in-line with expectations.
    8. The company bought back $49.4 million worth of its own stock in the quarter and still has $250 million remaining in its buyback program.
    9. Casey's successfully locked in favorable cheese costs through the end of 2017.

Q4 Negatives

On the other hand, the following four aspects of the report are concerning:

    1. In-store gross profit only rose 3.7 percent year over year, which marks a continued deceleration and fell short of the company's expense growth of 11.4 percent.
    2. Management's fuel margin outlook of 18.0 to 20.0 cents for fiscal 2018 appears to be optimistic.
    3. Grocery margins fell 103 basis points while the analyst was expecting a flat reading.
    4. Prepared Food gross margins fell 20 basis points while the analyst was expecting a flat reading.

The Bottom Line

Bottom line, the analyst is optimistic Casey's can deliver EBITDA growth later in fiscal 2018 as grocery inflation is expected to return.

At last check, shares of Casey's General Store were down 8.26 percent at $106.88.

Related Link:

Benzinga's Top Upgrades, Downgrades For June 6, 2017

The Market In 5 Minutes
Image Credit: By EagleTech199 - Own work, CC BY-SA 4.0, via Wikimedia Commons

Latest Ratings for CASY

Dec 2020Raymond JamesMaintainsOutperform
Oct 2020Sidoti & Co.MaintainsBuy
Sep 2020JP MorganDowngradesNeutralUnderweight

View More Analyst Ratings for CASY
View the Latest Analyst Ratings


Related Articles (CASY)

View Comments and Join the Discussion!

Posted-In: Analyst Color Earnings Long Ideas News Guidance Reiteration Analyst Ratings Movers Best of Benzinga

Latest Ratings

FSRMorgan StanleyMaintains40.0
MEDDA DavidsonMaintains302.0
VICRBWS FinancialMaintains120.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at