Casey's Serves a Blowout Quarter—Into a 31% Drawdown

Fiscal Q1 EPS up 28% and a 30% remodel lift in waiting, yet the stock sits a third below its June peak

CASY · Earnings Call · 2026-09-09

A blowout print buried under a de-rating

Casey's fiscal first quarter (ended July 31) was, on the numbers, one of its best: diluted EPS of $7.37 (+28%), net income of $274M (+27%), EBITDA of $485M (+17% and +40% on a two-year stack), and total revenue of $5.68B (+24.3%). “Our strong first quarter result is yet another proof point that our advantaged model is working, as we continue to gain share both inside and outside the store.” — Darren Rebelez, Chairman, President, and Chief Executive Officer · 2026-09-09 Inside same-store sales rose 3.2%, with prepared food and dispensed beverage up 4.8% (10.7% on a two-year stack) at a 59.3% gross margin. And yet the tape says the opposite. CASY is down 19.8% over the last 90 days and 31.3% below its June 10 peak of $915.60—and the entire tumble happened in a single two-week window that opened right around the June Investor Day, when management rolled out its fiscal 2027–29 plan. This is a de-rating, not a deterioration. The shares still trade at roughly 41x trailing net income (41.2x P/E, up 19% year over year and 88% over two years) and 32x operating income (32.3x, +76% year over year). At that altitude, a merely very good quarter cannot save the stock—the bar was perfection, and June reset it lower.

The category warfare underneath the headline

The most revealing detail isn't the EPS line; it's the skirmish inside grocery and general merchandise (same-store +2.7%, 6.5% on a two-year stack). National brand snacks have pushed price so hard they've lost the consumer: national brand chips are down roughly 8% while Casey's own private-label chips are up 16% in units. “they just price themselves out of the market, frankly.” — Darren Rebelez, Chairman, President, and Chief Executive Officer · 2026-09-09 This is the national brand theme sitting at the very top of Casey's keyword list this quarter, and it echoes the global tape's running commentary on price investment and private label. The offsetting engines are the story: nicotine alternatives growing 47% while combustible cigarette units fall 5–6%, energy drinks up 12%, and ready-to-drink cocktails up 30%-plus as beer stays soft. The margin math matters—nicotine alternatives carry roughly double the margin rate of cigarettes, so the mix shift is structurally accretive rather than a one-off. Management has been repositioning the backbar for two years; on the prior call it flagged the pouch business up 54%. The consumers themselves remain intact across cohorts: “we're seeing growth across all of the income cohorts.” — Darren Rebelez, Chairman, President and Chief Executive Officer · 2026-06-10

Fikes/Cefco: the drag and the payoff

The quarter's only blemish is self-inflicted and temporary. Remodeling acquired Cefco stores to Casey's banners—heavy kitchens, 4–6 weeks offline—knocked about 25bp off inside same-store sales and roughly 50bp off fuel gallons. “these numbers will inflect, but that is probably later in the fiscal year... It would probably be more fourth quarter.” — Darren Rebelez, Chairman, President, and Chief Executive Officer · 2026-09-09 The payoff is concrete: the Cefco stores already remodeled are seeing average prepared-food-and-dispensed-beverage lifts of 30%+. This is the Cefco store remodels story, and it remains the largest synergy bucket management has flagged for two years. The other swing factor is fuel. Fuel margin printed $0.478/gal, well above the mid-$0.40s modeling guide.

the quarter was volatile is the word I would describe with fuel margins. There were days when it was in the 60s, There were days when it was in the 30s. Most days, it was in the 40s.
Stephen Bramlage Jr., Chief Financial Officer · 2026-09-09

The structural case for elevated margins—the two-thirds of the industry running 10 stores or less have “just a checkbook... The only thing they can do in the short term to help their situation and stay above water is to turn a lever on fuel margin.” — Stephen Bramlage, Chief Financial Officer · 2026-06-10—is persuasive, but the market is clearly skeptical of extrapolating a conflict-flattered margin.

Wings, Texas, and whether the algorithm holds

Wings remain the new incremental occasion: 850 stores today, and “about 38% of guests that have purchased wings have had a wings only order,” — Darren Rebelez, Chairman, President, and Chief Executive Officer · 2026-09-09 with those customers lifting overall prepared-food frequency by roughly 30%. On the prior call management floated the long-term goal of wings becoming "the size of the pizza business." Texas (via Cefco/Fikes) is the other growth plank, with new-to-industry builds performing well and a 120-unit goal split roughly half builds, half tuck-in M&A. Notably, the incremental occasion keyword, which spiked two quarters ago, has cooled—yet another reminder that the platform-expansion narrative is maturing from novelty to execution. The plumbing, however, deserves a look. Effective net cash sits at -$1.8B (net debt position), and interest coverage has compressed to 7.3x (7.3x, down 62% year over year) from 19.1x. Capex is running $191M a quarter (capital expenditure, +6% year over year) on the remodel program, which is why free cash flow slipped to $190M from $262M even as earnings soared. Buybacks are modest at $63M (repurchases), and a net profit margin of just 3.6% (net income as a share of revenue) means the $32B market cap rests almost entirely on the multiple, not the quarter. That is the crux. Operationally, Casey's is firing on all three cylinders—food traffic, fuel margin, and a remodel pipeline that is about to inflect. But with store labor hours flat and operating expense up 8% (an expense increase the market is watching), the burden of proof has shifted from the income statement to the investor-return math. The stock already voted in June that the next three-year plan wasn't enough. Today's print is the first chance for the company to prove it simply took the market a quarter longer to read the fine print.