CASY - Embedded Expectations Analysis - 2018 11 09
Casey's General Stores, Inc. (CASY:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Assets, with a 1.7x Uniform P/B. At these levels, the market has bullish expectations for the firm, but management may have concerns about same-store sales growth, opportunities for margin expansion, and high operating expensesSpecifically, management may lack confidence in their ability to maintain strong
same-store sales growth, and to open new stores at an even distribution over the coming quarters. Moreover, they may have concerns about increased operating expense levels, and about their digital engagement programs, particularly their ability to target effective promotions to drive additional customer visits. Furthermore, they may have concerns about DC #3, and may be exaggerating the extent of their opportunities to maximize margins in certain markets. Finally, they may be concerned about their ability to leverage vendors' skillsets to drive growth in their programs while building their marketing teams, and about their decision to not execute share buybacks while they focus on their value creation plans
Casey's General Stores and its subsidiaries operate convenience stores under the names Casey's and Casey's General Store primarily in Iowa, Missouri, and Illinois. The company also operates stores under the name Tobacco City, selling primarily tobacco products, liquor stores, and a grocery store. Each Casey's Store carries food and nonfood items. Most of the company's food products are nationally advertised brands, and it also has an assortment of Casey's proprietary branded products. Stores sell regional brands of dairy and bakery products, and mostly provide beer. The company's nonfood items include tobacco products, health and beauty aids, school supplies, housewares, pet supplies, and automotive products.
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