Casey’s General Stores (CASY): A Bull Case Built on Fuel, Food, and Expansion

The convenience store sector has long been a bellwether for consumer behavior, and Casey’s General Stores (CASY) is proving itself to be a standout player. With Q1 2025 results showcasing 17.3% revenue growth and a stock price surge of 5.33% post-earnings, the company’s bull case is gaining traction. Let’s dissect the factors fueling this momentum—and why investors might want to take note.

The Financial Foundation: Outperforming on Multiple Fronts

Casey’s latest results are a masterclass in execution. Earnings per share (EPS) hit $2.33, a 14.8% beat over estimates, while revenue rose to $3.9 billion, surpassing forecasts by 3.2%. The company’s P/E ratio of 26.4x reflects investor confidence in its growth trajectory. Key drivers include:
- Inside Sales Growth: Prepared foods and energy drinks contributed $48 million to inside sales, which jumped 15.3% year-over-year. Cost sandwiches saw a 50% sales increase, and bakery sales rose nearly 10%.
- Fuel Resilience: Same-store fuel gallons sold surged 20.4%, outpacing the Mid-Continent region’s 4% decline. While margins dipped slightly to $0.364 per gallon due to SEFCO integration, management expects improvements as supplier contracts are renegotiated.
- Operational Efficiency: Same-store labor hours dropped 2%, and operating expenses rose only 3.2%, underscoring cost discipline.

Strategic Moves: Acquisitions and Innovation

The acquisition of SEFCO (254 stores) is central to Casey’s growth story. Already, three stores have been rebranded to blend Casey’s and SEFCO offerings, yielding higher margins and sales. Management projects $45 million in synergies over 3–4 years, primarily through menu optimization and fuel pricing strategies. This move not only expands market share but also diversifies revenue streams.

Meanwhile, the company is doubling down on food innovation. New items like chicken wings and fries in select markets are gaining traction, alongside existing hits like pizza and hot sandwiches. The continuous improvement team is also leveraging AI tools—such as an automated voice assistant for pizza orders—to reduce labor dependency. These steps address the 5.2% sales decline linked to GLP-1 drugs by offering healthier, protein-rich alternatives like low-carb wraps and fresh produce.

Industry Tailwinds and Competitive Edge

The convenience store sector is navigating headwinds like GLP-1 adoption and inflation, but Casey’s is positioned to thrive:
- Regional Dominance: In the Mid-Continent region, competitors like Wawa and QuikTrip are expanding, but Casey’s aggressive store additions (270 planned in 2025) and SEFCO integration give it scale.
- Fuel Margin Resilience: Improved fuel margins in 2024 and strategic store locations (e.g., truck stops) buffer against price volatility.
- Economic Resilience: Fuel and prepared foods are recession-resistant, shielding the business from broader downturns.

The global convenience store market is projected to grow at a 6.78% CAGR through 2028, fueled by private-label products and affordability-driven demand—trends Casey’s is already capitalizing on.

Risks and Mitigations

No investment is without risks. Margins face pressure from SEFCO’s lower-margin stores, and fuel prices could remain volatile. Additionally, GLP-1’s impact on snack sales demands relentless innovation. However, management’s focus on:
- Leverage Reduction: Aiming for a 2x leverage ratio by year-end, supported by $1.3 billion in liquidity.
- Dividend Stability: Maintaining a $0.50-per-share dividend, signaling cash flow confidence.

suggests these challenges are manageable.

Conclusion: A Bull Case Rooted in Execution and Vision

Casey’s General Stores is a rare blend of financial discipline, strategic acquisitions, and operational agility. With 17.3% revenue growth, a 11% EBITDA guidance, and a pipeline of store openings and menu innovations, the company is primed to outpace both peers and industry headwinds.

The data is compelling:
- The SEFCO deal alone adds $45 million in synergies, and same-store sales growth of 3–5% is achievable.
- The Mid-Continent region’s 10% store growth by key rivals underscores the opportunity for Casey’s to capitalize on consolidation.
- A $500 million annual capex plan ensures sustained expansion without overleveraging.

While risks linger, Casey’s execution to date—and its ability to adapt to GLP-1 trends and fuel dynamics—supports a bullish stance. For investors seeking a play on convenience retail’s evolution, CASY is a name to watch.

Final Call: Buy.