CASY - Embedded Expectations Analysis - 2021 07 09
Casey's General Stores, Inc. (CASY:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 35.5x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about the effect of mix shifts and velocity on margins, their growth initiatives, and the performance of the Prepared Foods business.Specifically, management may have concerns about the sustainability of their sales performance and the impact of their mix shift and sales velocity on in-store margins. Moreover, management may be exaggerating the potential of their private label initiative and the momentum in the Prepared Foods business. In addition, they may have concerns about changing consumer behavior, their performance relative to the larger industry, and their growth initiatives.
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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