Casey's General Stores Inc CASY delivered strong third-quarter operating results Monday, indicating early progress with its initiatives to drive growth by enhancing store-level performance while reallocating capital to increase shareholder value, according to RBC Capital Markets.
The Analyst
RBC Capital Markets’ Irene Nattel maintains a Sector Perform rating on Casey's General Stores with an unchanged $139 price target.
The Thesis
Casey's General Stores reported third-quarter EPS of $1.13, in-line with consensus expectations. Although the performance of individual segments fluctuated, the company’s overall operating results for the quarter were solid, Nattel said in a Monday note.
Gross profit in the fuel segment was slightly lower than expected. Although gas margins were favorable, weekly volatility makes forecasting difficult, the analyst said.
Casey’s is still in the initial stages of enacting gas price optimization strategies and is trying to find a balance between proactive fuel pricing and gas volumes, Nattel said.
“Although CASY should benefit from the rollout of a fuel price optimization strategy in the fourth quarter, the process can be bumpy."
The company’s grocery and other merchandise stores delivered strong performance, the analyst said. Casey’s once again exhibited opex control, with growth of 5.7 percent in the third quarter versus the forecast of 7.7 percent, which helped its EPS performance, she said.
Price Action
Casey's General Stores shares were up 2.79 percent at $134.95 at the time of publication Tuesday.
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