Casey’s General (CASY) Sets Fresh 52-Week Highs On Strong And Consistent OctQ Results

3:31 pm Wednesday, December 07th, 2022

Casey’s General (CASY) is setting fresh 52-week highs today following another quarter of double-digit earnings upside in Q2 (Oct). The convenience store chain also raised its FY23 same-store inside sales outlook to +5-7% from +4-6% while guiding to the low end of its prior operating expense outlook. These updated forecasts reflect encouraging results from CASY’s recent initiatives to boost sales and limit operating expenses, underscoring management’s ability to excel despite a tricky economic environment.

One of CASY’s core focus this fiscal year was simplifying its store structure to reduce employee turnover and store labor hours in an effort to offset higher worker costs. By making running a Casey’s General Store simpler, worker engagement has shot up toward record highs, leading to a sequential improvement in turnover every month this year.

CASY also reduced training and overtime hours, with the metrics falling 25% and 22%, respectively, yr/yr.

CASY noted that by achieving lower operating expenses without negatively impacting its customers’ experience, it believes it can sustain these lower costs long term.

Overall, CASY’s steady growth over the past few quarters is a testament to its value-based business model, capitalizing on trade-down effects by the consumer, as well as its positioning to benefit from an ongoing recovery in fuel consumption since the pandemic. For example, in-store traffic continued to accelerate in Q2, expanding nicely from Q1 (Jul). Meanwhile, fuel gallon volumes ticked up sequentially in Q2 as gas prices began trending lower. Furthermore, with CASY attacking its operating expenditures, once inflationary costs moderate, the company will be in an excellent position to return to margin expansion. With previous CPI reports indicating that the worst of inflation may already be in the rear-view mirror, CASY may begin to realize these benefits sooner rather than later.

Bottom line, CASY is proving to be a solid choice during the current environment ripe with recession fears. With most of its locations positioned in the Midwest, where populations are relatively more spread out, individuals are forced to drive to work or school, cushioning CASY from the pronounced uncertainty affecting the broader retail landscape.