(CASY) – Casey’s General Stores – grocery and other merchandise same-store sales were up

October 9th, 2008

Casey’s General Stores, Inc. (CASY) is proving that even when the economy slows, consumers will still pull over to purchase such novelties as chewing gum and fountain soda. The company’s share price has been rallying since mid July.

Casey General Stores, Inc. operates 1,468 convenience stores in the Midwest. The company was founded in 1959, has a market cap of $1.55 billion and is headquartered in Ankeny, Iowa.

First-Quarter Results

Casey’s stepped up and delivered solid first-quarter results on Sep 3, demonstrating the company’s ability to weather a choppy economy. Revenue increased 22% from last year to $1.57 billion.

When excluding one-time items due to flood damages, earnings increased to $31.3 million, up from $29.8 million in the same period last year. This produced earnings of 60 cents per share, ahead of analyst estimates of 51 cents.

This is the second time in the last two quarters that Casey has surprised and beaten analyst estimates, having posted earnings of 28 cents against the expected 25 cents last quarter.

Sales Trends

Casey reported that higher gasoline prices led to its customers purchasing less gallons per visit, but also mentioned that grocery and other merchandise same-store sales were up 4.7% from last year. Prepared food and fountain drink same-store sales were up 12.3% from last year.

Analyst Estimates

After the solid quarterly results, analyst boosted their estimates. The current-year estimate is up to $1.56 per share from $1.49 less than 30 days ago.

The next-year estimate isn’t super bullish, but still very respectable in this environment, pegged at $1.60, a 2% earnings growth projection.

Based upon the current-year estimate, this stock is trading at a premium to the overall market, carrying a forward P/E multiple of 19X.

The Chart

CASY shares have been rallying since early July, bottoming out below $22 and recently eclipsing the $30 mark. The 52-week high is now within striking distance, just above $31.

Content Courtesy: Zacks Investment Research

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