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Top Factors behind CASY’s Fiscal 3Q17 Top and Bottom Line Miss

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Casey’s top line sees growth but misses consensus in fiscal 3Q17

As we saw previously in this series, Casey’s General Stores (CASY) reported its fiscal 3Q17 results[1. quarter ended January 31, 2017] on March 6, 2017. The company’s top line rose 13% to ~$1.8 billion, driven by a 19% jump in fuel sales along with a 6% increase in in-store sales.

The company’s top line returned to a growth trend after eight consecutive quarters of declining sales. However, as in the first two fiscal quarters of 2017, CASY missed Wall Street revenue estimates.

CASY’s convenience store peers also reported improved sales in their last reported quarters. Murphy USA’s top line edged up 4.4% YoY after reporting 15 consecutive quarters of declining sales.

CST Brands (CST) also reported a 5.6% YoY increase in sales, pushing into it positive territory after seven negative sales quarters.

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EPS fell short of expectations again

Although CASY’s top line showed improvement during fiscal 3Q17, its bottom line remained under pressure. The company’s adjusted earnings per share (or EPS) fell 40% YoY (year-over-year) to $0.58, missing the consensus by a wide gap of $0.32, or 35%.

The earnings drop was primarily the result of an increase in operating expenses, which rose 12.6% during the quarter. “Approximately two-thirds of this increase in the quarter was due to a rise in the wages and payroll taxes,” said Bill Walljasper, CFO of Casey’s General Stores.

The company had fallen short of Wall Street earnings forecasts during fiscal 1Q17 and fiscal 2Q17.

Investors looking for exposure to Casey’s General Stores through ETFs can invest in the First Trust Consumer Staples AlphaDEX ETF (FXG). CASY makes up 0.75% of FXG.

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