Healthy same-store sales growth prompted Morgan Keegan analyst John Lawrence on Friday to upgrade shares of Casey’s General Stores to "outperform,” the Associated Press reported.
The Ankeny, Iowa-based company reported a 1% drop last week in second-quarter earnings and missed analyst expectations, since a 17% jump in revenue was downplayed by higher costs.
But the company had good news that caught analysts’ attention, according to the Associated Press: same-store sales. Grocery and other merchandise same-store sales rose 4.9%, while prepared food and fountain drinks same-store sales rose 9.3%.
Lawrence said the company is benefitting from cash-squeezed consumers trading down to convenience stores for items, rather than shopping in pricier stores, according to the Associated Press. He said the recent 30% pullback in share value is unjustified, given Casey’s strong same-store sales, but creates an attractive entry point for investors.
