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Volatile Gasoline Prices Take a Toll on Casey’s Fiscal 3Q16 Sales

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Casey’s misses consensus sales estimate by 1.8% in fiscal 3Q16

Casey’s General Stores (CASY) reported total sales of $1.6 billion in fiscal 3Q16 ended January 31, 2016, missing consensus estimates by $29 million.

The company saw a 6.3% YoY (year-over-year) fall in sales due to a ~20% fall in the retail price of fuel, which was partly offset by a 5.7% rise in gallons sold and an increase in its store base in 3Q16 compared to the same period a year ago.

Casey’s gross margin improved by 271 basis points to 23.7% of sales due to its better margin performance in the prepared food category.

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The company’s operating expenses during the quarter rose 8.7% YoY to $259 million, driven partly by the company’s operational initiatives, including the rollout of 24-hour conversions, a pizza delivery service, and major remodels, and partly by the increase in its store base compared to the previous year.

Casey’s net profit stood at $38 million for the three months ending January 31, 2016, falling 3.8% over the same period last year. Investors looking for exposure to Casey’s can invest in the iShares Russell 2000 Growth ETF (IWO), which has around 0.53% of its holdings invested in the company.

Recent results for convenience store and supermarket peers

CST Brands (CST) reported its 4Q15 results on February 19, 2016. The company reported earnings of 55 cents per share, beating the consensus estimate by 10 cents per share. However, it reported a 22% fall in its top line to $2.1 billion, missing the consensus by $410 million.

Murphy USA (MUSA) reported its 4Q15 results on February 3, 2016. The company missed earnings estimates by a huge margin of 36 cents per share, reporting earnings per share (or EPS) of $0.69.

Kroger (KR) reported its 4Q15 results on March 3, 2016. The company missed analysts’ consensus revenue estimate despite delivering a 3.3% rise in sales. It reported EPS of $0.57, better than the consensus estimate of $0.54.

Casey’s manages its business under one reportable segment, but it releases financial details on three broad revenue categories: Fuel, Grocery and Merchandise, and Prepared Food and Fountain.

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