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Casey’s Beat Its 1Q18 Earnings after 4 Consecutive Misses

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EPS exceed expectations in 1Q18

Casey’s General Stores (CASY), which reported its 1Q18 results on September 5, posted a 14% YoY (year-over-year) fall in its EPS (earnings per share) to $1.46. However, the company exceeded Wall Street analysts’ earnings expectations after failing in the previous four quarters. On average, analysts expected $1.45 in 1Q18 earnings.

“The majority of the earning shortfall from last year was related to a change in the provisions of our long-term incentive plan, an increase in the Illinois state tax rate,” said Terry Handley, Casey’s president and CEO. Ignoring the negative impact of the Illinois state tax and the stock option activity, Casey’s EPS would have been $1.63 during the quarter.

As we discussed in the three previous sections, Casey’s met the annual margin targets for all of its segments during the quarter.

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1Q18 operating expenses

Casey’s 1Q18 operating expenses rose 10% to $321.2 million, primarily due to an increase in employee-related costs arising from new store openings and the implementation of growth programs in a larger number of stores. During the quarter, the operating expenses were in line with the fiscal 2018 goal of a 9%–11% increase. Also, the costs had a $0.12 negative impact on the EPS.

The company also recognized $7.3 million in expenses related to changes in the provision of its long-term incentive plan. Excluding these costs, the total operating expenses rose 7.5%.

Investors looking for exposure to Casey’s through ETFs can consider the iShares Edge MSCI Min Vol USA Small-Cap ETF (SMMV). Casey’s accounts for 0.62% of SMMV.

In the next part, we’ll discuss Casey’s stock market performance and analysts’ recommendations.

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