Earlier this month, Q1 earnings from Casey's General Stores (Nasdaq: CASY) failed to impress the market. Despite double-digit growth in its bottom line, the retailer couldn't beat Street estimates, and its shares fell more than 6%. Let's take a closer look to see whether this company could be of interest to investors.

The quarter
Revenue for the quarter rose to $1.87 billion, up 37.5% from a year ago on the strength of same-store sales growth and the addition of 132 more stores from the year-ago period. Those sales passed through to the bottom line, as net income rose by about 5.6%.

The company posted a 6.2% rise in same-store sales for the grocery and other merchandise segment and 15.3% for the prepared-food and fountain segment, both of which beat the company's own annual benchmarks. The higher number of stores led to a 15.1% rise in total grocery and other merchandise sales. This is significant, especially at a time when competitors such as The Pantry (Nasdaq: PTRY) and SUPERVALU (NYSE: SVU) have experienced declines in their same-store sales.

On the other hand, Casey's same-store sales volume for gasoline dropped 2.7% in the quarter, primarily because of a 39% rise in gasoline prices from a year ago. Still, the increased price helped the company deliver an average margin of $0.172 per gallon -- more than the company's goal of $0.135 per gallon. This, along with higher store counts, helped raise total retail gasoline sales by 47% and the number of gallons sold increased by 6%.

Growth positioning
Apart from the new stores that it added during the quarter, there are 15 new stores under construction and six stores under written agreement for purchase. Once all stores start operating, net sales should accelerate.

So far, strong sales have been offset by higher operating expenses. The company said competitive cigarette prices and a shift in purchases to larger beer cases have also hurt margins. Higher costs for commodities such as cheese and coffee also weighed on margins. All of these led to a 17.3% increase in operating expenses after adjusting for legal costs in the prior period. But if commodity costs start to fall from their current high levels, Casey's should be able to post stronger profitability.

Foolish bottom line
Casey's has shown good top- and bottom-line growth. The company has a strong balance sheet and a good growth strategy in place. However, it remains to be seen how Casey's passes on the impact of high food costs to consumer and boosts its margins. Still, I'm bullish about the company and expect healthier performance, once commodity costs slip back to more normalized levels.