- EBITDA Growth Reached $410 million, up 17.5% YoY, with full-year guidance raised to 15-17% growth.
- Same-Store Sales Rose 3.3%, driven by 4.8% growth in prepared food and dispensed beverages.
- Free Cash Flow Generated $176 million, supporting $31 million in share repurchases (part of $200M FY26 target).
- Fuel Margin Stabilized at 41.6 cents per gallon, with lower fuel prices boosting discretionary spending.
- Cefco Rebranding Expected to improve margins as conversion begins in CY2026, though current EBITDA is healthy but not EPS-accretive.
Operational Highlights
The company saw margin expansion in the grocery and general merchandise category, driven by increased guest traffic and effective merchandising. The prepared food margin in Cefco stores is about half of Casey's, but the rebranding effort is expected to start in earnest at the beginning of the calendar year, which will likely improve margins. The company is focused on driving traffic, delivering outsized growth in high-margin categories, and having great overall satisfaction scores.
Guidance and Outlook
The company updated its EBITDA guidance for the fiscal year, expecting EBITDA to increase 15% to 17%, with inside same-store sales growth of 3% to 4%. The tax rate is expected to be 24% to 25%. The guidance implies a sequential deceleration in EBITDA growth in the second half, largely due to the easy comparison in the first half and the lapping of the Fikes acquisition in November.
Valuation and Growth Prospects
With a P/E Ratio of 34.16 and EV/EBITDA of 15.34, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 9.0%. The company's strong performance and guidance suggest that it is on track to meet or exceed these expectations. The company's ROIC of 104.0% and ROE of 22.98% indicate a strong ability to generate returns on capital.
Strategic Initiatives
The company is testing wings in a limited number of stores and refining its operations and offering, with a potential rollout planned around calendar events like the Super Bowl or March Madness. The company is also resetting store layouts to allocate more space to nicotine alternatives, which are expected to continue growing rapidly.
Competitive Landscape
The company is confident in its ability to compete with private convenience stores, citing its differentiated offer and strong performance in competitive markets. The government shutdown had a minimal effect on the business, as SNAP-eligible sales account for less than 2% of total sales.