What has been supportive for the stock, however, is the company’s steady increase of its dividend -- upped by 12% this quarter to $0.29/share -- and its $300 mln share repurchase program. Also, CASY has implemented a "Value Creation Plan" in which it is looking to enhance fuel margin through product optimization, streamlining mobile apps and online ordering capabilities, and reducing 24-hour pizza delivery locations in order to generate higher store-level profits. The hope is that once these initiations gain more traction, CASY will see a boost in margins and profitability, enabling it to consistently surpass analysts' expectations once again.
At the moment, though, CASY still has some work to do. For the quarter, EPS came in at $0.51, missing consensus by $0.15 and falling by 33% year/year. Looking at its fuel business, while same-store gallons sold increased by 2.0%, the average margin of 16.3 cents per gallon was the company’s lowest quarterly fuel margin since fiscal 2014. Putting pressure on this segment is a rising wholesale cost environment.
On the top line, revenue was up 13% to $2.09 bln, falling short of the $2.12 bln consensus. As noted above, CASY has been facing a difficult environment in the convenience and food market as competitors have ratcheted up promotional activity. CASY has been especially impacted in its Prepared Food and Fountain segment. In Q4, same-store sales decreased by 1.3% following a 1.7% increase last quarter. In addition to some unfavorable weather during the quarter, the reduction of the number of pizza delivery nights across its business pressured its same store sales.
The good news is that CASY is expecting its fuel margin to improve this fiscal year, forecasting average margin of $0.185-$0.205. It is also anticipating that same store sales will pick up for its prepared food and fountain business, seeing comps of +1.5 to 3.0%. At the mid-point, that would represent an improvement from FY18's +1.7% mark.
To conclude, it was another disappointing quarter for CASY, but, the company believes its Value Creation Plan will help right the ship. And, from a shareholder yield perspective, the company continues to buy back stock, and it has increased its quarterly dividend for 18 years in a row. So, there are a couple silver linings here in an otherwise rough quarter.