Casey's Beats Estimates as Revenue Rises

Casey’s General Stores (NASDAQ:CASY), a prominent convenience retail chain, released its fiscal 2025 third-quarter earnings results on March 11. Earnings per share (EPS) came in at $2.33, beating analysts' consensus estimate of $2.00, while revenue totaled $3.904 billion compared to the expected $3.723 billion. Overall, the quarter showcased robust growth, especially in inside sales, and reflected the company's strategic expansions through acquisitions.

Source: Analysts' estimates for the quarter provided by FactSet.

About Casey's General Stores

Casey’s General Stores is a convenience store chain operating over 2,600 locations primarily in the Midwestern United States. It generates significant revenue from fuel sales, food and groceries, and other convenience items. The company focuses on smaller communities, particularly those with populations under 20,000, where competition from national chains is limited.

Recently, Casey's has focused on expanding its store footprint through acquisitions and enhancing its high-margin prepared food offerings. Its prepared food products, which attract substantial foot traffic and offer higher profit margins than fuel, are among its key success drivers.

Quarter Highlights: Performance and Strategy

In its fiscal 2025 third quarter, which ended Jan. 31, Casey’s General Stores reported EPS of $2.33, which was flat year over year. Revenue of $3.904 billion was $180 million more than analysts anticipated, pointing to effective business execution despite macroeconomic challenges.

While its fuel margins dipped slightly to 36.4 cents per gallon, total fuel gross profit climbed by 17.4% due largely to the increased store count from acquisitions. Prepared food offerings continued to shine, with same-store inside sales growing by 3.7%, and sales of prepared foods and beverages rising by 4.7%. These products' substantial margin of 57.8% reflects Casey's strategy of pursuing high-margin sales in non-fuel categories.

From a strategic standpoint, Casey's expanded aggressively by acquiring 228 additional stores and building 21 more since the start of the fiscal year, particularly bolstering its presence in less competitive small-town markets.

Casey's operating expenses rose by about 18% in the quarter, mainly due to the costs associated with its Fikes acquisition and the integration of those stores. Nonetheless, same-store operating expenses increased by only 3.2% when excluding credit card fees.

The company maintained solid liquidity with $1.3 billion in available resources. Interestingly, it repurchased no shares in the quarter though it has about $295 million left on its current buyback authorization. This could indicate a strategy to preserve its cash reserves.

The company maintained its quarterly dividend at $0.50 per share.

Outlook and Future Prospects

Casey’s expects its EBITDA to grow by roughly 11% in fiscal 2025. This anticipated growth points to confidence in operational improvements and aggressive plans to add a total of about 270 new stores for the year.

Continued expansions into less competitive markets and leveraging high-margin products will remain key strategic focuses. While operating expenses are projected to increase by 11% to 13%, management appears focused on carefully managing integration costs and gaining efficiency improvements.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Casey's General Stores. The Motley Fool has a disclosure policy.