"It's a gas!" sang the Rolling Stones about Jumpin' Jack Flash. But that's probably the last thing Casey's General Stores (NASDAQ:CASY) wants to talk about after it released its recent quarterly earnings.

For the first quarter, Casey's reported that weak gasoline sales caused diluted earnings to fall about 22%, missing analyst consensus projections and sending the stock down more than 6% for the day. On a more positive note, total sales jumped 28% and growth was positive in the company's three key areas of gas, prepared food and fountain, and grocery/other.

Same-store sales fell 2.9% in the gasoline category as high prices hurt margins and caused customers to economize on their driving. Management also stated that it was up against difficult comps due to a 7.7% increase a year ago. Petrol sales are already a very low-margin affair for Casey's, but they account for nearly 70% of total sales; for the quarter, higher oil input prices caused the average gas margin to fall to 9.8 cents per gallon, down from 11.8 cents in last year's first quarter. However, gas sales drive customers into the stores for the purchase of high-margin food, beverages, and other gas-station goodies.

Same-store sales grew an impressive 9.5% in prepared food and fountain drinks, while the average margin was 62.9%. Grocery/other grew as well, but only posted 2.3% comp growth for the quarter, on average margins of 32.2%.

As I mentioned during Casey's last quarterly update, the company seeks to grow by opening its own new stores and acquiring mom-and-pop shops to augment organic growth. This quarter's press release mentioned its recent agreement to purchase 33 HandiMart stores, and so far this year, it has acquired six other stores and built three new ones. Casey's is also in the process of issuing about $100 million in debt to make the purchase, almost doubling current long-term debt. As of the quarter's end, the debt-to-capital ratio stood at 15%, but cash on hand is sufficient to cover a good portion of that. As long as no additional debt is issued until HandiMart is digested, overall leverage looks to be manageable for the time being.

Casey's consistent operating strategy has allowed it to grow sales in the double-digits over the past five years and post operating cash flow that is also growing and has consistently exceeded reported net income two- or threefold over the past three full years.

Granted, most of that cash flow is being reinvested into either acquiring or opening new stores. But as long as Casey's doesn't take on additional debt or get caught making a dud of an acquisition, it should be able to continue posting strong growth figures.

With only about 1,400 stores currently, and operations in nine Midwestern states, there is plenty of space for Casey's to expand. The company is also relatively insulated from the direct competition of other convenience stores such as The Pantry (NASDAQ:PTRY), because most Casey's stores are located in towns with less than 20,000 residents. That also keeps it out of the way of larger food and consumer product chains such as Kroger (NYSE:KR), Target (NYSE:TGT), Wal-Mart (NYSE:WMT), or even Walgreen (NYSE:WAG). In other words, there are definite benefits in keeping it rural - that's how Wal-Mart got its start, as it stayed out of the reach of what are now Sears' (NASDAQ:SHLD) K-Mart stores.

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Fool contributor Ryan Fuhrmann is long shares of Walgreen but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.