Convenience store operator Casey's General Stores (NASDAQ:CASY) is up to bat tomorrow, releasing fourth-quarter and full-year results. Below are details to fill you in on recent events and what to expect, from a sales and earnings perspective.

What analysts say:

  • Buy, sell, or waffle? Seven analysts follow Casey's. Two are bullish, one isn't, and four are on the fence with hold ratings.
  • Revenue. Analysts project sales of $997.6 million for the fourth quarter and $4 billion for the full year.
  • Earnings. Analysts project first-quarter earnings at $0.26 per share, or 18% more than last year's $0.22. Full-year earnings are pegged at $1.14.

What management says:
During its third-quarter earnings release, management offered goals for its three key product categories for this fiscal year. It looks for 2% growth in annual same-store gasoline gallons sold, 3.9% comps growth in grocery and other merchandise, and a 7.9% jump in prepared food and fountain comparable sales. It also looks to expand the operating margin by holding increases in operating expenses below an increase in the gross margin. Finally, management's goal for this year is to acquire 50 stores and open 10 new Casey's General stores.

What management does:
Record high gasoline prices are hurting margins and comps in the fuel sales category, even though groceries and prepared food are very profitable for Casey's. Judging by margin trends in recent quarters, the challenging gasoline environment is weighing on overall profit margins, with little relief in sight because gas prices recently hit $4 per gallon in a number of Casey's core Midwest markets.

Margins

10/05

1/06

4/06

7/06

10/06

1/07

Gross

17.9%

17.3%

16.8%

15.8%

15.6%

15.7%

Operating

3.7%

3.5%

3.4%

3.0%

2.7%

2.8%

Net*

1.9%

1.9%

1.9%

1.7%

1.5%

1.6%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Casey's is expanding sales by more than 20% per year by opening new stores and acquiring widely available mom-and-pop convenience stores throughout the Midwest. And growth opportunities continue to be vast because the industry is highly fragmented and Casey's only operates in 10 Midwestern states.

Casey's also focuses on smaller towns with a lower likelihood of competition from the likes of Wal-Mart (NYSE:WMT), Walgreen (NYSE:WAG), or CVS (NYSE:CVS). As a result, demand for its food and household items is as likely to be driven by necessity as it is by impulse buys after consumers stop in to fill up their gas tanks.

Casey's competitive position has led to earnings and cash-flow increases in the double digits in recent years, and its acquisition strategy is more conservative than that of archrival The Pantry (NASDAQ:PTRY). Despite the razor-thin profit margins, Casey's is definitely worth keeping an eye on.

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