Casey's General Stores (NASDAQ:CASY) Shares rose Thursday on gains driven by the company's latest quarterly results, as strong demand for hot sandwiches and bakery products along with higher fuel margins boosted profitability and set up an adjustment EBITDA to increase by at least 8% in FY25.
“Casey started the fiscal year on the right foot and delivered another solid quarter highlighted by strong internal gross profit growth,” said CEO Darren Rebelez, adding that the operations team continued to find efficiencies by reducing same-store hours for the ninth consecutive quarter.
The fiscal first-quarter results “reinforce our investment thesis around CASY’s unique positioning in lower-cost, small-market geographies,” RBC Capital said in Thursday’s research note, raising its price target by 11% to $403 and increasing EBITDA and EPS estimates for fiscal 2025 and 2026 but lowering revenue guidance amid “generally restrained consumer spending.”
While the company saw no change in spending from three-quarters of Casey's (CASY) core demographic, the remaining quarter of Casey's customers, categorized as lower-income, are “modestly changing their shopping habits,” Rebelez said on the company's earnings call, choosing to buy fewer items than they did previously.
“Overall, I would say our guest base is holding up pretty well,” Rebelez said on the call.
And while same-store sales slowed to +2.3% in the most recent quarter from +5.4% a year ago, Rebelez attributes the decline to 2023 lottery sales that drove comparable sales above typical.
“We did see some weakness in traffic, and we can point directly to those lost lottery transactions as part of that weakness,” Rebelez said, pointing to higher-than-normal traffic in 2023 due to the $1 billion Mega Millions and Powerball jackpots.
Casey's General Stores (CASY) stock is It rose more than 5% on Thursday.