Casey’s Gasoline Sales Witnessed a Resurgence in 1Q17

Gasoline sales accounted for 58.2% of Casey’s (CASY) total revenue in 1Q17. Revenue generated by this segment dropped 10.8% YoY to $1.1 billion during the quarter. Though the sales growth continued to be in the negative territory, it was, however, the best performance in the last six quarters.

Casey’s gasoline sales have been under pressure for some time due to the volatility in fuel prices. Fuel sales have fallen by an average of 18.7% in the previous six quarters.

Casey’s fuel station and convenience store peers have also recorded declining revenues. Fuel sales of CST Brands (CST) and Murphy USA (MUSA) have fallen at an average of 19% and 26%, respectively, in the last six quarters. Kroger (KR), which owns 1,330 fuel stations, has seen an average fuel sales decline of 22% in the last six reported quarters.

Casey’s fuel segment was the company’s best-performing category in 1Q17 and exceeded the company’s annual goal for both sales comps and average margin. Same-store gallons rose 3.1% during the quarter as compared to the annual goal of 2%. The average margin stood at 19.5 cents per gallon as compared to the 18.4 cents per gallon. The company sold 17.9 million RINs (renewable fuel credits) for $14.7 million, which boosted its margins during the quarter.

“Fuel margins finished above goal for the quarter due to elevated RIN values as well as a declining wholesale fuel cost environment experienced throughout the quarter,” said Terry Handley, president and CEO of Casey’s. He also talked about the same-store gallon and said, “Same-store gallons sold continue to benefit from lower retail fuel prices and increased miles driven throughout our operating territory.”

Investors looking for exposure to Casey’s can invest in the iShares S&P Mid-Cap 400 Growth ETF (IJK), which has around 0.38% of its holdings invested in the company.