Casey’s General Stores Earnings Miss Raises Red Flag

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The belt tightening that hurt CASY stock might also affect the economy ahead of summer holidays

As a Fortune 500 company operating more than 2,200 convenience stores in 16 states, Casey’s General Stores (NASDAQ:CASY) aligns nearly perfectly with the concept of revenge travel. Offering freshly prepared foods and quality fuel, the company helps keep the consumer economy moving, quite literally.

However, Iowa-based Casey’s latest earnings disclosure implies that rough news for CASY stock could signal concerns for the broader business ecosystem.

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Tuesday’s results announcement for the fiscal fourth quarter, ended April 30, 2023, didn’t bring many positives to the table. On the bottom line, diluted earnings per share came in at $1.49, comparing unfavorably to the $1.60 posted in the year-ago quarter. Wall Street analysts anticipated EPS of $1.58.

On the top line, total revenue clocked in at nearly $3.33 billion, slipping 3.8% from the $3.459 billion rung up in Q4 2022. Adding to the pressure on CASY stock, the latest sales tally also dipped against analysts’ consensus target of $3.404 billion. With the stock down ahead of Thursday’s opening, the shares look set to extend a six-month decline that clocked in at 12.5% as of Wednesday’s close.

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Same Sales Pop

That said, one notable positive was that inside same-store sales popped up 6.5% with an inside margin of 39.6%. Per Casey’s press release, “[t]otal inside gross profit increased 8.9% to $445.5 million compared to the prior year.”

However, fuel sales dipped in Q4 2023 to $2.138 billion from the year-ago tally’s $2.34 billion. What’s particularly alarming about this segment’s revenue erosion is that gasoline prices were cheaper during Casey’s fiscal Q4 this year than against the year-ago period.

Using data from the U.S. Energy Information Administration, the average retail gasoline price between February and April 2022 was $3.95. For the same quarter this year, the average sat at $3.47, or about a 12% discount. Nevertheless, fuel sales at Casey’s declined by 8.8%, boding poorly for both CASY stock and for consumer stability overall.

Essentially, the myriad pressures weighing over households — predominantly inflation but also including mass layoffs and rising borrowing costs from the Federal Reserve’s hawkish monetary policy — may have taken their toll. As a result, consumers seek any way to save money, which might include driving less.

Cue Options Traders

Conspicuously, Casey’s disappointing earnings results also attracted activity in the derivatives market. According to Fintel’s screener for unusual stock options volume, call volume hit 1,573 contracts against an open interest reading of 591 during the June 6 session. Usually, call volume averages 25 contracts.

On the other side, put volume reached 1,561 contracts against open interest of 1,063. On average, put volume prints 46 contracts.

However, options sentiment at time of writing is rather poor. Per Fintel’s dashboard, the put/call ratio stands at 1.29. Since puts generally represent bearish wagers, a ratio greater than one indicates pessimism.

The post Casey’s General Stores Earnings Miss Raises Red Flag appeared first on Fintel.

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