MF article on Casey’s results by Brian Stoeffel. I believe anyone has access.
Saul
Management at Casey’s General Stores Inc. Has Some Explaining to Do.
Food and fountain comps came nowhere near management’s expectations. I want to know why…
http://www.fool.com/investing/2016/06/06/management-at-casey…
It’s not mentioned in the article, and I know that CASY’s revenue goes down when the price of gas falls, but isn’t anyone else concerned that in spite of more stores all the time, and staying open 24 hours, CASY has had declining year-over-year revenues for six, count 'em, SIX, quarters in a row. As I said, despite more stores and longer hours. In fact, not only were revenues below last year, they were below the year before too!
You can’t look at sales for Casey, at least not overall; it’s extremely misleading. The entire fuel price is passed thru (included in sales), so the price of gas has a huge influence on total company sales.
In FY15, fuel sales were 2/3 of sales, and they went down by almost 20%. That’s going to dominate the change in total company sales. But gross profits in fuel went up! And that’s what matters.
You have to look at gross profits for fuel and ignore the sales figure. Which means you have to ignore the overall company sales. Focus instead on fuel margins. For the other two segments you can focus on sales.
Note that all three segments are showing healthy gross profit growth.
Hi Scoopshot,
I’m aware of all that. There’s just a limit to how much you can milk out of margin improvement if revenues keep falling. And why are they below two years ago, even, with two years of new stores opening and longer hours open? Just doesn’t sound right. To me, that is. It may sound fine to others.
Saul
Hi Saul, you have to look closely at the numbers.
Hopefully I can get this table to look nice:
fy16 fy15 fy14
fuel
sales 4214.8 5144.4 5555.6
gross profits 381.7 351.2 267.9
grocery
sales 1974.1 1794.8 1583.2
gross profits 629.1 575.5 507.9
prepared
sales 880.7 780.9 659.2
gross profits 550.3 466.1 403
other
sales 52.5 47.1 43.3
gross profits 52.4 47.1 43.2
total
sales 7122.1 7767.2 7841.3
gross profits 1613.5 1439.9 1222.0
You can see sales are dominated by fuel, and that allows the distortion. But instead focus on gross profits. Pretty nice growth!
I should have added the growth rates:
growth fy16/fy15 fy15/fy14
fuel
sales -18.1% -7.4%
gross profits 8.7% 31.1%
grocery
sales 10.0% 13.4%
gross profits 9.3% 13.3%
prepared
sales 12.8% 18.5%
gross profits 18.1% 15.7%
other
sales 11.5% 8.8%
gross profits 11.3% 9.0%
total
sales -8.3% -0.9%
gross profits 12.1% 17.8%
You can see that gross profit changes for all segments shows nice growth. Also for sales, excluding fuel.
For fy17, if you plug in management's guidance, you get about flat gross profits for fuel, about 11.5% growth for grocery, and 15.3% for prepared. And with a few of my own assumptions, about 11% eps growth.
Hi Scoopshot,
So how many stores did they have in 2014 and how many do they have now?
Andy
I don’t have those exact numbers (they don’t list it in the press release), but they have roughly 1900 stores.
They had about a 4 to 5% growth rate in stores (built and acquired) fy15/fy14.
Fy16/fy15 showed only about 2.5-3% growth, so definitely under their goal.
Their goal for fy17 is about 3.5% to 4.5%
Management just announced that monthly comps will no longer be released. They say it’s because they want to focus more long term.
When things are going well, I usually look at this and think, “That’s great, even though they’d get a short-term bump, they’re focusing long term.”
But when the company is falling well short of expectations, as it is in food right now, it makes me think, “What are they hiding?”
Brian
No position
Anyway for them to sell more “Other?” Those are some impressive margins!
fy16 fy15 fy14
fuel
sales 4214.8 5144.4 5555.6
gross profits 381.7 351.2 267.9
grocery
sales 1974.1 1794.8 1583.2
gross profits 629.1 575.5 507.9
prepared
sales 880.7 780.9 659.2
gross profits 550.3 466.1 403
other
sales 52.5 47.1 43.3
gross profits 52.4 47.1 43.2
total
sales 7122.1 7767.2 7841.3
gross profits 1613.5 1439.9 1222.0