Casey's General Stores (CASY) as a High-Conviction Q1 2026 Tactical Play

Casey's General Stores (CASY) has emerged as a compelling tactical play for Q1 2026, driven by its robust earnings momentum, strategic expansion, and unique positioning in the convenience retail sector. As market analysis shows, the global convenience store market is projected to grow at a compound annual growth rate (CAGR) of 5.2% through 2034, Casey's has demonstrated a disciplined approach to capitalizing on this trend while navigating competitive pressures from industry giants like 7-Eleven and Wawa.

Earnings Momentum and Financial Resilience

Casey's Q4 2025 results underscore its financial strength, with diluted EPS rising 12.4% year-over-year to $2.63 and net income increasing 13.0% to $98.3 million. For fiscal 2025, the company delivered a 9.0% EPS increase to $14.64, alongside a 13.3% rise in EBITDA to $1.2 billion. These figures reflect the company's ability to balance margin expansion with operational efficiency, particularly in its inside sales segment, where same-store sales grew 1.7% and gross profit surged 12.5% to $582.4 million.

Looking ahead, Casey's has set ambitious yet achievable targets for 2026. The company expects EBITDA growth of 10–12% and inside same-store sales increases of 2–5%, supported by a stable inside margin of ~41%. Fuel sales, while facing a projected flat gallon growth (−1% to +1%), are expected to benefit from a 21.4% year-over-year rise in fuel gross profit to $307.8 million in Q4 2025, suggesting resilience in volatile energy markets.

Strategic Expansion and Competitive Positioning

Casey's strategic focus on rural and small-town markets has been a key differentiator. The acquisition of 198 CEFCO stores in 2024 expanded its footprint into Texas and southern states, reinforcing its presence in underserved regions. This strategy aligns with the convenience retail sector's broader shift toward value-added services, such as prepared foods and premium beverages. In fiscal 2024, Casey's saw a 6.8% same-store sales increase in its prepared food and dispensed beverage segment, a trend that has continued into 2026, with Q2 results showing 3.3% same-store sales growth.

However, the company faces stiff competition from national chains like 7-Eleven and Wawa, which have leveraged economies of scale and brand recognition to dominate urban and suburban markets. While 7-Eleven plans to open 600 new U.S. locations by 2027, and Wawa maintains a strong foodservice reputation, Casey's has countered with a vertically integrated model-owning distribution centers and real estate-which enhances margin stability. Additionally, its 2026 expansion plan to open 80 new stores through M&A and construction positions it to capitalize on market gaps left by rivals focused on high-density areas.

Challenges and Opportunities

A critical challenge for Casey's is its recent decline in customer satisfaction, which dropped 5% in 2025 to a score of 75. This contrasts with Wawa's consistent 82 score and 7-Eleven's strong regional performance, highlighting the need for improved customer experience initiatives. However, Casey's has shown adaptability: its mobile app and loyalty programs are evolving to meet digital expectations, and its focus on scratch-made offerings (e.g., pizza) differentiates it in a sector increasingly driven by foodservice innovation.

The broader convenience retail sector is also navigating macroeconomic headwinds, including slower U.S. consumer spending growth (projected at 1.5% in 2026). Casey's, however, is well-positioned to weather this environment due to its high-margin model and rural focus, where discretionary spending remains relatively stable. Its 2026 operating expense guidance of 8–10% growth suggests a balanced approach to cost management, ensuring profitability even amid inflationary pressures.

Conclusion

Casey's General Stores represents a high-conviction tactical play for Q1 2026, combining strong earnings momentum, strategic expansion, and a defensible position in the convenience retail sector. While challenges such as customer satisfaction and competitive pressures persist, the company's disciplined capital allocation, vertical integration, and focus on rural markets provide a durable competitive edge. As the sector grows toward a projected $4.71 trillion valuation by 2034, Casey's is poised to outperform peers by leveraging its unique strengths in a fragmented and evolving landscape.