Casey’s General Stores (CASY) Grew EBITDA 17.1%. Can Fuel Sustain Growth?

Casey’s General Stores, Inc. (NASDAQ:CASY) reported fiscal first-quarter revenue of $5.68 billion on September 8, while EBITDA increased 17.1% to $485.1 million. EBITDA is a company-defined non-GAAP measure that adds net interest expense, income taxes, depreciation, and amortization back to net income. GAAP net income rose 27.1% to $273.7 million.

The operating picture was uneven. Same-store inside sales increased 3.2%, with an inside margin of 42.2%. Fuel gross profit climbed 19.6% to $446.9 million despite a 0.3% decline in same-store gallons. The investment question is how reliably stronger margins can support earnings while demand growth moderates.

Bull Case

Prepared food remains a source of strength for Casey’s General Stores, Inc.. Prepared-food and dispensed-beverage same-store sales increased 4.8%, and the category’s margin expanded to 59.3% from 58.0%. Management attributed sales growth primarily to positive traffic, led by whole pizzas. That provides evidence of customer demand alongside the margin improvement.

Fuel also delivered more profit from each gallon sold. The reported margin reached 47.8 cents per gallon, excluding credit card fees, versus 41.0 cents a year earlier. Total gallons increased 2.5% as the larger store base outweighed the modest decline at comparable locations.

Expansion provides another earnings opportunity. Casey’s General Stores, Inc. maintained its fiscal 2027 targets for 8% to 10% EBITDA growth and at least 120 store additions through acquisitions and new construction. Management also said integration of the Fikes acquisition was ahead of schedule.

Successful integration could spread purchasing, distribution, and operating capabilities across more locations. The first quarter gives the annual earnings plan a strong start, while leaving room for growth to moderate over the remaining periods.

Bear Case

Fuel profitability is carrying substantial weight. If margins narrow while comparable gallons remain soft, Casey’s General Stores, Inc. would need stronger inside-store profit or operating efficiencies to offset the pressure. Selling more gallons through added locations helps total earnings, but raises the importance of returns on the expansion investment.

Same-store inside-sales growth slowed to 3.2% from 4.3% a year earlier. Prepared-food demand remains positive, but the broader store business needs enough incremental gross profit to cover wages, insurance, and other operating costs. Margin expansion can support earnings for a period; sustained customer spending would make that growth more dependable.

Capital allocation adds another test. Casey’s General Stores, Inc. expects approximately $800 million of property and equipment purchases this fiscal year. EBITDA excludes depreciation and does not deduct this cash investment, so its growth alone cannot establish how much cash remains available after spending.

New and acquired locations must therefore produce attractive earnings relative to their cost. Investors should assess store productivity and cash generation alongside the pace of additions.

Hedge Fund Sentiment

The filings available so far reflect positions held before Casey’s General Stores, Inc. reported its fiscal first-quarter results. Insider Monkey’s database showed 48 hedge funds holding Casey’s General Stores, Inc. at the end of 2Q2026, up from 43 funds three months earlier.

Conclusion

Casey’s General Stores, Inc. delivered a quarter that supports the maintained outlook. Food demand, fuel profitability and expansion offer several routes to earnings growth. The next test is whether second-quarter fuel margins remain supportive while inside-store demand and acquired-store productivity improve. Stronger cash generation after investment would make the full-year plan more convincing.

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This article is originally published at Insider Monkey.