CASY Near 2026 Lows After Earnings, Earnings Show Deceleration Despite Beat

We're [music] back on Morning Trade Live. Let's focus in on the chart for Casey's stock, you know, clearly under some pressure here today. It's going to make uh this picture look quite a bit different as the stock is down over 17%. But this stock was under pressure leading into this report. It had a really nice earnings release last uh quarter, but ever since then, gave back pretty much all of that and then some. it was sitting right at the 200 day moving average uh before breaking uh that level and plunging uh here today. So reached an all-time high on the 11th of June and trending down since but it is the subject of the morning trade and of course the stock reported earnings uh as well. Joining us to help make sense of the numbers is Marley Kaden uh host of Train 360 as well as market on close here for the Schwab network. and Marley uh Casey's uh for those unfamiliar sort of a middle uh you know Midwestern rural focused I would say suburban at the at the very least I I say gas station with an elevated food offering >> a gas station convenience mart I think is probably fine people really like the pizza that's likely what you've heard about if you're talking about Casey's in addition to their gas offerings um overall though as you mentioned they had lost some momentum coming into this report they were down about 11% over the last month and the numbers weren't bad here. There's just some concerns. So, let's walk through the numbers and then we'll talk about where some of the concern is coming from that's leading to the 17 plus% move to the downside. We got their fiscal first quarter earnings. They were a beat actually. They come earnings EPS came in at 737 a share that was up 28% from the year earlier period. It was well above the consensus looking for $6.72. Revenue was up 24% to 5.68 billion. that beat estimates looking for about 5.57 billion dollars. So overall doing well on top and bottom line. Fuel uh gross profit up 20% margins climbed to 47.8 cents a gallon from 41 cents a year ago. That more than offset here's where we're starting to get to some of the concern. A 3/10en of a percent decline in same store gallons. Now for reference in the year ago period they were up 1.7%. Prepared food and dispensed beverage same store sales were up 4.8%. That was led by increased foot traffic and those whole pizza sales. Now the more reasons for caution overall inside same store sales increased 3.2%. But that growth rate is down year-over-year. It was 4.3% a year ago. So we are seeing some deceleration there. Operating expenses also higher. They're up 8% as store growth, higher credit card fees, and elevated labor cost added to their overall costs. They also left their fiscal year outlook unchanged here. They have growth uh in their Ibida of 8 to 10% inside same store sales they project to be between 2 and 5% here. So that keeps them kind of right in line with where they were at the high end. Does have the potential to get up to that 4.3 that they were a year earlier. But the midpoint is closer to this decelerated range of 3.2% which is what we got this quarter. Those fuel margins are really they were impressive, right? The fuel margins rising. The question is, can they persist? Obviously, we're looking at higher gas prices. I was talking about yesterday how Labor Day was a new record. It was the first time the holiday had ever been over $4 nationally a gallon. We're at $415 right now. So, not a bad thing if you're a gas station, but we are seeing people drive less and car pooling more to try to offset some of these costs. They really need to see if their food sales can accelerate though because that's where the pressure point was here. Casey's does have this three-year plan though. They focus on food and beverages efficiency. They plan to add at least 400 stores. They are saying for fiscal 27 they'd like to open at least 120 stores. So, I think overall growth story remains intact. Uh, but just some general concerns about if they can keep those fuel margins and if they can get a little uptick into the store sales. >> Appreciate it, Marley Kaden. Make sure you check out Marley later on about 20 minutes from now. Trading 360 coming up next. But let's trade it now as we welcome in Scott Bower, CEO of Prosper Trading Academy. You know, Scott, I was just looking at this chart. I mean, Casey's in the last quarter has basically given up the entire year. Uh, how are you looking at an example trade here? Yeah. And and I just want to point out that when I sent this to you, I don't know about a half an hour ago or so, the stock was was definitely lower. Unfortunately, when you look at the option chain, because of this big drop here, there aren't any lower strikes to trade until we go out to November expiration, there is some support in the stock around 575 or so. So, I'm looking to sell the November 560 550 put spread. When I had sent this to you, it was trading around five bucks. That's what I wanted. Now it's trading somewhere right around three bucks or so. So I would probably sell that here at around 3 to 350. You see that the stock comes back down a little bit. I like that area of that 570 to 575. That had been prior resistance. So I'm looking for that to be now hopefully support. >> Good stuff. Hey Scott, before I let you go, I want to get your general market thoughts. holiday shortened week maybe uh back to school football's kicking off so things start to wake up sometimes usually around this time for markets as you know but we still have the tugof-war under the surface today I look over it seems like another AI infrastructure leadership type of day but that's about it you only got like 27% of stocks higher in the S&P um as you look out to the rest of the week inflation data Fed next week what's on your mind >> yeah it's all about the inflation data right now and what that's going to do to to move the needle on what the Fed may do next week. I'm not sure that the Fed is really going to, you know, look at uh the CPI and PPI this week and and put that into their decision, but we certainly will see changes in the marketplace based on that data, especially after, you know, that big big number of the jobs data that we got last week. >> Good stuff. Scott Bower, it's always a pleasure, my friend. Good to chat this morning. Scott Bower, CEO of Prosper Trading Academy.