Casey's General Stores
Shares of Casey's have moved sharply higher in recent after-hours trading, thanks to its reported record earnings. Net income for the first quarter of fiscal 2006 totaled $20.9 million, a 31.1% increase over the same period a year ago. The record numbers were driven by an accelerating top line whose revenues grew by 19%.
Gasoline sales continue to fuel the company, with the amount of gallons sold having increased by 11.1%. Even on a same-store basis, the amount of gallons was higher by 7.7%. In fiscal 2005, sales of gasoline made up 63% of Casey's revenues.
After consumers went to Casey's to get a good deal on gas, many went on to buy other products, and the company cashed in. Grocery and merchandise sales made up only 29% of sales, but they accounted for 50% of gross profits. And even more lucrative was its prepared food, which includes items such as made-from-scratch pizza and doughnuts. This part of the business made up 8% of sales but a whopping 26% of gross profits.
In the latest quarter, grocery and merchandise sales grew by 10.8%, prepared foods by 11.6%. As was the case last year, the good money continues to come from food products. Gross profit margins for its grocery and merchandise category increased to 32% from last year's level of 31.4%. Margins for prepared foods were 64%, much higher than last year's mark of 60.5%.
And Casey's wasn't done there. Its operating expense as a percentage of revenues was 10.4%, better than last year's 11.4%. It all adds up to one solid quarter for the company.
Casey's won't show up on the radar for those looking for a hot biotech, but this stock has been a strong performer over the past few years. Strong growth, improving margins, and a manageable balance sheet are all reasons to look a little closer at this small-town general store.
Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.