Casey's: Record Year, Wings Take Flight

Casey's General Stores capped off fiscal 2026 with a record year, delivering highest-ever diluted EPS of $19.16 (up 31% y/y) and EBITDA of nearly $1.5B (up 23%). The stock has continued its climb, up +13% over the last 90 days, though it sits about 8.7% off its June 10 high — a modest pullback after a strong report. The story remains one of a high-quality operator executing a disciplined growth algorithm, but two themes stand out: the resilience of fuel margins in a volatile geopolitical environment, and the scaling of the wings platform that management believes could rival the pizza business.

Fuel Margin Resilience: Structural or Cyclical?

The fourth quarter saw fuel margins hit a record $0.469 per gallon, up $0.093 y/y, despite a 14% spike in average retail prices (to $3.40). This runs contrary to historical patterns where higher prices compress margins. When asked if the relationship has broken down, CEO Darren Rebelez offered a nuanced view:

“I don't know that it's fundamentally changed for the industry. I do think it did play out a little bit differently this quarter than maybe we've experienced historically.” He pointed to the choppy, volatile path of the conflict, which allowed retail prices to lag wholesale cost swings, widening margins.

This echoes prior commentary. In the March 2026 call, he noted, “Typically, what happens in a situation like this is the cost runs up on gasoline … and margins get a little bit compressed on the front side of that curve.” — Darren Rebelez, Chairman, President and Chief Executive Officer · 2026-03-10 The current quarter's experience toggles that pattern, with CFO Steve Bramlage adding, “Structurally, 2 things … CPGs have tended to increase pretty consistently with CPI … we don't see that necessarily breaking.” — Stephen Bramlage, Chief Financial Officer · 2026-06-10 So while the volatility is transient, the structural support for firm margins from a fragmented industry and rising small-operator costs appears durable.

The flywheel of the inside store is key. Store sales inside rose 10.2% for the year, with prepared food same-store sales up 5.2% and grocery up 3.9%. This traffic, driven by the value proposition, supports fuel volumes and margins. The company's gas prices are often a headline, but the real story is the pizza velocity and prepared food innovation.

Wings: Scaling the Next Big Occasion

Wings are no longer a test. By the end of Q4, they were in nearly 850 stores, up from 550 in Q3. Management is still measuring the impact, but early data is encouraging: guests who order wings on their own increase their prepared food frequency by 30%, and whole pizza volume in wing stores remains up high-single digits — no cannibalization. On the potential, Darren was candid:

We think this has the potential to be the size of the pizza business, frankly. Now that took us 40 years to get to where we are today in pizza.

This is a bold, long-term vision. For context, pizza is the company's largest prepared food subcategory. If wings reach even half that scale, they would meaningfully add to incremental occasion and traffic. In the December 2025 call, Darren noted they were still refining flavors and procedures: “We still had some menu refinements that we're working on. Some procedural gaps we're trying to close.” — Darren Rebelez, Chairman, President and Chief Executive Officer · 2025-12-10 Those gaps appear closed, and the rollout over the next two years will be a key operational metric.

Prepared food margins hit a five-year high in Q4 at 59.5%, helped by reduced waste and lower cheese costs. The grocery margin also expanded 90 basis points to 35.7%, driven by mix shift toward nicotine alternatives, energy drinks, and private label. This margin expansion is a recurring theme; we've seen pizza business strength and nonalcoholic beverages contributions before, but the consistency is notable.

Balance Sheet and the Coming Strategic Plan

The company ended the year with net debt of $2.0B (down from $2.3B), a leverage ratio of 1.5x, and $1.4B of available liquidity. Free cash flow was $722M, and management boosted the dividend 14% (marking 27 consecutive years) and expanded the buyback to $1B. In the prepared remarks, they highlighted the strong gross profit growth and record ROIC of 12.7%.

The near-term guidance is solid: FY27 EBITDA growth of 8-10% on a tough comp, with inside same-store sales up 2-5%. The company expects 120 new stores, a mix of M&A and new builds. The CEFCO integration is progressing, with 50 more conversions this year, and management sees “a lot of dry powder left” for further upside from those underperforming stores.

The bigger catalyst is the next three-year strategic plan to be unveiled on June 24. Darren ended the call with “We love the hand we're holding, and we look forward to continuing the momentum.” — Darren Rebelez, Chairman, President and Chief Executive Officer · 2026-06-10 That plan will set the tone for the stock's next leg. Given the wings runway, the CEFCO synergies, and the structurally elevated fuel margins, the setup appears favorable.

That said, the market has already priced in a lot. The stock trades at ~41x trailing EPS, a premium to historical norms. If fuel margins revert to mid-$0.40s as guided, the upside may be more limited. But the operational momentum and new initiatives provide a credible path to sustain growth.

In summary, Casey's is not a story of a single breakthrough; it's a story of relentless execution — inside the store, at the fuel pump, and on the M&A front. The record year is evidence the model works. The wings could be the unexpected flywheel that pushes the company into a new growth orbit.