CASY - Embedded Expectations Analysis - 2020 06 10
Casey's General Stores, Inc. (CASY:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 40.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about margins, fuel profitability, and digital initiativesSpecifically, management may lack confidence in their ability to blend up their mix towards higher-margin items, maintain strong new store contribution, and sustain improvements in overall fuel profitability and revenue. Furthermore, they may be overstating the potential of their digital integration and signed conversion to improve prices and their Joplin distribution center's (DC) ability to relieve pressure from other DCs. Moreover, they may have concerns about their labor deployment effectiveness exercise, changes to the timing of their equity compensation performance targets, and their decision to purchase more pre-blended fuel
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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