Casey's General Stores delivered another earnings beat Tuesday, but investors weren't entirely impressed. Strong fuel margins did much of the heavy lifting, while sales growth inside its stores slowed.
The convenience-store chain reported fiscal first-quarter earnings of $7.37 a share, up 28% from a year earlier and comfortably above Wall Street's consensus of about $6.78. Revenue jumped 24% to $5.68 billion, topping estimates of roughly $5.56 billion.
Shares tumbled more than 8.52% in late trading following the report. The stock entered earnings after a run up of roughly 37% this year through Friday, although it had lost about 11% over the previous month.
The results showed why investors have liked Casey's. Fuel gross profit rose nearly 20% as margins climbed to 47.8 cents a gallon from 41 cents a year ago, more than offsetting a 0.3% decline in same-store gallons. Prepared-food and dispensed-beverage same-store sales rose 4.8%, led by increased foot traffic and whole-pizza sales.
Still, there were reasons for caution. Overall inside same-store sales increased 3.2%, but that growth is down from 4.3% a year earlier. Operating expenses rose 8% as store growth, higher credit-card fees, and elevated labor rates added to costs.
Casey's also left its fiscal-year outlook unchanged, including growth in earnings before interest, taxes, depreciation, and amortization of 8% to 10% and inside same-store sales growth of 2% to 5%.
Investors will be watching whether elevated fuel margins can persist and whether food sales can accelerate. Casey's recently laid out a three-year plan focused on food and beverages, efficiency, and adding at least 400 stores.
The company also said integration of Fikes Wholesale, the $1.15 billion acquisition that added 198 CEFCO convenience stores primarily in Texas, is running ahead of schedule. Casey's expects the deal to generate roughly $45 million in annual synergies as it expands CEFCO's prepared-food offerings, including Casey's pizza.
That growth story remains intact. But after the stock's strong run, investors appear to be demanding more than another earnings beat.