Value Creation Plan Likely To Aid Casey's (CASY) Q2 Earnings

Casey's General Stores, Inc. (NASDAQ:CASY) is expected to report second-quarter fiscal 2019 results on Dec 10. In the last reported quarter, the company delivered a positive earnings surprise of 13.1%. However, in the trailing four quarters, this operator of convenience stores has underperformed the Zacks Consensus Estimate by an average of 9.5%. Let’s see what awaits this quarterly release.

How are Estimates Faring?

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.62, reflecting 26.6% increase from $1.28 per share registered in the year-ago quarter. Notably, the consensus mark has moved north by a penny over the past 30 days. For revenues, the consensus mark stands at $2,512 million, up approximately 16.6% from the year-ago quarter’s figure.

Caseys General Stores, Inc. Price, Consensus and EPS Surprise

Factors Holding Key

Casey's is on track with its value creation plan to improve sales and profitability. This includes new fleet card program, price and product optimization, loyalty program, digital engagements comprising mobile app and online ordering capabilities, cost containment efforts and capital reallocation plan.

Notably, the company’s fleet card program, which involves managing and monitoring of initial sales, back-end system processing, billing and other consumer-oriented services, is likely to increase fuel sales by 2% in the first year. Moreover, the program is anticipated to be accretive to in-store sales by the third quarter of fiscal 2019, which may serve as a tailwind for the company. Also, Casey’s digitalization efforts will help create a seamless shopping experience, online as well as in-store, and facilitate same-store sales growth.

However, the company is witnessing a rise in operating and interest expenses that might hurt margins and the bottom line. For fiscal 2019, Casey’s continues to expect an 8.5-10.5% increase in operating expenses, which is an added concern for the quarter to be reported. Also, high level of debt is a worry. Nevertheless, the company’s price and product optimization strategy will help augment sales and aid margins. This, along with the aforementioned upsides bode well for Casey’s second-quarter show.

What the Zacks Model Unveils

Our proven model shows that Casey's is likely to beat earnings estimates in second-quarter fiscal 2019. For this to happen, the stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Casey's has an Earnings ESP of +6.17% and a Zacks Rank #1.

Other Stocks With Favorable Combination

Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post earnings beat.

The Michaels Companies, Inc. (NASDAQ:MIK) has an Earnings ESP of +2.86% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation (NASDAQ:COST) has an Earnings ESP of +1.24% and a Zacks Rank #3.

DSW Inc. (NYSE:DSW) has an Earnings ESP of +9.85% and a Zacks Rank #3.

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