Casey's Recipe for Growth: Fuel, Food, and Aggressive Expansion

ANKENY, IA – December 09, 2025 – While many retailers grapple with economic uncertainty, Casey's General Stores, Inc. (Nasdaq: CASY) just delivered a masterclass in strategic execution. The convenience store giant posted second-quarter results that didn't just beat expectations; they painted a clear picture of a company firing on all cylinders, prompting an upward revision of its full-year outlook. With diluted EPS climbing 14% to $5.53 and EBITDA surging 17.5% to $410.1 million, the numbers speak for themselves. But for investors and industry analysts, the real story lies beneath the surface, revealing a powerful, two-pronged strategy combining aggressive store expansion with an increasingly dominant in-store food service operation.

This performance is not a matter of chance. It is the direct result of a multi-year plan that is transforming Casey's from a familiar roadside stop into a formidable competitor in the quick-service restaurant (QSR) space, all while intelligently expanding its physical footprint. As CEO Darren Rebelez stated, the results reflect "strong sales and traffic growth across the entire store," a testament to a business model that is proving both resilient and highly profitable.

The In-Store Engine: More Than Just a Convenience

The true engine of Casey's profitability is found inside its stores. While same-store fuel gallons saw a modest but welcome increase of 0.8%, the inside sales figures reveal where the company is truly differentiating itself. Inside same-store sales grew by a healthy 3.3%, but the crucial detail is the driver: a robust 4.8% jump in the prepared food and dispensed beverage category. This segment, which includes the company's famous pizza, is now the cornerstone of its value proposition.

Casey's has effectively become the fifth-largest pizza chain in the United States, a fact that underscores its successful pivot to a food-first mentality. This strategy directly counters the primary challenge facing the convenience sector: declining fuel demand and intense competition. By offering high-quality, value-driven meals, Casey's is capturing consumer dollars that might otherwise go to traditional fast-food outlets. The numbers validate this approach, with inside margin expanding to an impressive 42.4%, driven by the higher profitability of prepared foods. This high-margin revenue stream is a critical buffer against the inherent volatility of the fuel market and a key reason for the 13.5% surge in total inside gross profit to $703.4 million.

This evolution aligns perfectly with broader industry trends, where foodservice has become the undisputed growth frontier for convenience retail. As consumers become more time-pressed and value-conscious, the line between convenience stores and QSRs is blurring, and Casey's is leading the charge. Its ability to consistently grow sales in this category demonstrates a deep understanding of its customer base and a powerful brand loyalty built one pizza slice at a time.

Fueling Growth Through Strategic Expansion

Complementing its in-store success is an ambitious and disciplined expansion strategy. Casey's is not just improving its existing locations; it is rapidly growing its territory. The company is now operating nearly 9% more stores than it was a year ago, with 236 additional locations contributing to the top line. This growth is a calculated mix of new construction and, more significantly, strategic mergers and acquisitions.

In the past year, Casey's has demonstrated a voracious appetite for growth, capped by the largest acquisition in its history: Fikes Wholesale, which brought 148 CEFCO Convenience Stores in Texas and 50 other locations into the fold. This move dramatically expands Casey's presence in the South and showcases management's skill in identifying and integrating valuable assets. According to company leadership, this M&A strategy is often more capital-efficient than building from the ground up, allowing Casey's to acquire stores at below replacement cost and then invest in retrofitting them with its high-margin kitchens.

This expansion is the primary driver behind the 16.8% increase in total fuel gallons sold and a 13.0% rise in total inside sales. Of course, such rapid growth comes with costs; operating expenses rose 16.7%, with about 10.5% of that increase directly attributable to operating the newly acquired stores. However, this is the kind of investment that builds long-term enterprise value, and with a plan to open at least 80 more stores this fiscal year and reach a total of 500 new stores over its three-year strategic plan, Casey's is signaling that its growth trajectory is far from over.

Reading the Financial Gauges: Confidence and Capital Discipline

For investors, the most significant news may be the company's updated fiscal 2026 outlook. Management now projects EBITDA will increase by an impressive 15% to 17% for the year, a substantial boost reflecting confidence in both its operational strategy and market position. This optimism is well-founded, supported by strong margins across the business, from the 41.6 cents-per-gallon fuel margin to the expanding profitability of its in-store offerings.

This financial strength enables a balanced approach to capital allocation. While Casey's is investing heavily in growth—with planned capital expenditures of approximately $600 million—it is also committed to returning capital to shareholders. The company repurchased $31 million of its shares during the quarter and announced another quarterly dividend of $0.57 per share. This dual focus on reinvestment and shareholder returns is supported by a robust balance sheet, which boasts approximately $1.4 billion in available liquidity, providing ample firepower for future acquisitions and strategic initiatives.

Wall Street has taken notice, with a consensus of positive analyst ratings and increased price targets following the earnings release. The market is rewarding a clear, effective strategy that is generating tangible results and building a sustainable competitive advantage.

Navigating Headwinds on the Horizon

Despite the stellar performance, Casey's is not immune to the challenges facing the broader retail and economic landscape. The 4.5% increase in same-store operating expenses, driven partly by higher labor rates, is a reminder of persistent inflationary pressures. The company must continue to manage rising costs and a price-sensitive consumer base that is increasingly focused on value.

Furthermore, new and evolving risks are emerging. The growing use of GLP-1 drugs for weight loss, for instance, could subtly alter consumer behavior around food and beverage consumption, potentially impacting the very prepared-foods category that has been so central to Casey's success. As a food-forward retailer, this is a trend that warrants close observation. These challenges, combined with the long-term structural decline in fuel demand, underscore why the company's strategic pivot toward high-margin, in-store sales is not just a growth driver, but a critical element of its long-term resilience.