So what: Through the first six months of fiscal 2016, Casey's has seen revenue decline 10.5% to $3.97 billion as gasoline prices dropped to under $2 per barrel. But net income jumped 40.9% over that time to $140.8 million, or $3.57 per share.
Lower gas prices drive higher consumption by consumers, and since gas stations usually make a fixed margin on each gallon, not a percentage of each sale, falling prices are actually good for Casey's. Better yet is an increase in spending within the store. Management set a goal to increase grocery and other merchandise sales by 6.2% on a same-store basis this fiscal year and grow prepared food and fountain by 10.4%.
Now what: Operationally, Casey's is hitting on all cylinders and it's also planning to grow its store count by 75 to 113 units this fiscal year. Given the strong earnings growth, the stock is still fairly inexpensive at 21 times trailing earnings. I think the strong operational environment will be in place for the next few years, and this is one company who's winning big from the decline in oil prices.