Casey’s General Stores, Inc. (CASY), the operator of convenience stores, had record earnings in fiscal 2009 and is optimistic about 2010 despite the struggling economy. CASY has surprised on estimates 2 out of the last 4 quarters by an average of 10.67%. The company has a PEG ratio of 0.96.
Company Description
Casey’s General Stores, founded in 1959 in Iowa, operates convenience stores affiliated with gas stations in small towns across the United States. As of March 31, the company operated 1474 stores.
Casey’s Had Record Year
On June 15, Casey’s reported fourth quarter results that missed on analysts’ estimates by 5 cents a share while reporting record earnings for the year.
Fourth-quarter earnings per share were 31 cents compared to analysts’ estimates of 36 cents but were higher than the year ago quarter of 28 cents per share. Adjusted fiscal earnings per share for the year were $1.80, which was a company record.
The Prepared Food and Fountain segment was the big winner in 2009 as same-store sales rose 9.1%, higher than the targeted 6.8%. Margins also increased slightly to 61.4% from 61.2%.
In 2010, the company is looking to expand its coffee and fountain selections as well as continuing the roll-out of its made-to-order sub sandwich program. Fourth quarter same stores sales climbed 7.2%.
The Grocery and Other Merchandise segment saw same store sale growth of 8% in the fourth quarter and 7% for fiscal 2009. Gasoline was the more difficult segment as prices spiked at the beginning of fiscal 2009. The fourth quarter saw same-store gallons sold rise 1.2%.
Even in difficult economic conditions, the company managed to increase its store count by 2%, adding 16 new stores and 16 acquired stores. It also replaced 14 stores and completely remodeled 2 others.
Dividend Increased
Unlike many other companies which are slashing dividends during the global recession, Casey’s actually increased it by a penny to 0.85 cents from 0.75 cents payable on Aug 17 to shareholders of record on Aug 3. That is a current yield of 1.40%.
Consensus Estimates Move Higher
Covering analysts are bullish about the company’s outlook in 2010. First quarter 2010 estimates climbed 4 cents to 59 cents per share in the last 30 days as 2 out of 5 covering analysts raised.
Fiscal 2010 consensus estimates jumped 20% in the last month to $1.96 from $1.80 per share as 3 out of 5 analysts raised.
Value Fundamentals
Casey’s General Stores is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 13.02 and a price-to-book ratio of 1.80. The company has a solid 5-year average return on equity (ROE) of 11.27%.
