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Casey's General In-Store Performance Sinks Q2 Results

Casey's General In-Store Performance Sinks Q2 Results
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Casey's General Stores Inc (NASDAQ: CASY) reported second quarter earnings Monday, including EPS, EBITDA and revenue misses. 

The Analyst

Jefferies' Christopher Mandeville maintains a Buy rating on Casey's stock with an unchanged $134 price target.

The Thesis

Casey's earnings report had some positive attributes, including "solid" fuel results and ongoing restraint in operating expenditures, Mandeville said in a 

Tuesday note. (See Mandeville's track record here.) 

But these positives were not strong enough to offset weak in-store performance, especially as the prepared food comps and margins "struggled mightily" and may have even gone negative in October, which would mark the first such incidence since January and February of 2010, the analyst said. 

Management also revised its prep food comp guidance range lower for the full year, but additional information from the company would be needed to "better understand what is going on," Mandeville said. One possible explanation for the weakness could be unfavorable cheese prices, and if this is the case, the company could see some relief due to cheese prices falling "sharply" over the past few weeks, the analyst said. 

On the positive front, the company "opportunistically" bought back $55 million worth of its stock at around $108 per share, which leaves another $117 million remaining, Mandeville said. 

Price Action

Shares of Casey's were trading lower by more than 8 percent Tuesday afternoon at $111.37. 

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Latest Ratings for CASY

Mar 2018BMO CapitalMaintainsMarket PerformMarket Perform
Mar 2018Wells FargoMaintainsMarket PerformMarket Perform
Dec 2017Raymond JamesDowngradesOutperformMarket Perform

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Posted-In: Cheese Prices Christopher Mandeville Commodity Prices convenience storesAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


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