Is Casey's Stock a Buy After 23% Haircut?

Casey's opens new store Oct. 1, 2026, at 4020 SW Gage, Topeka

By Michael Hooper

Stock in Casey's General Stores (CASY) recently suffered a 23% haircut.

Traders sold the stock down after the company reported higher than expected operating expenses, rising 8% YOY in Q1 ended July 31 and did not raise its outlook. Same-store fuel gallons turned negative (-0.3%) for the first time in several quarters.

The company beat expectations for earnings and revenue in the quarter. They also made $0.47 cents per gallon on fuel sold, a near record, while navigating the oil market during the US-Israeli war against Iran.

I toured the new Casey’s General Store, 4020 SW 6th St. in Topeka, finding wider aisles, high-tech coffee machines, and a brand new stainless steel kitchen where they make fresh pizzas, sandwiches and donuts every day

The late Frank Sabatini once said a good franchise is a business model that can be replicated in other communities. Sabatini, former owner of Capital City Bank, made a fortune in the Pizza Hut business in the 1970s, 80s and 90s, owning over 30 Pizza Huts at one time. But that business is not doing very well today suffering from competition from places like Casey’s.

Casey’s sells pizza by the slice and whole pizzas, along with fresh sandwiches and donuts. Casey's has some of the highest profit margins in the industry, with inside-store margins of 42.2%; anchored by high-margin prepared foods (59.3%) and non-alcoholic beverages.

Stock in Casey's was up 10% year-to-date through Oct. 2; up 125% over the past three years and up 225% over the past five years. I started buying the stock in 2020 and recently picked up a few more shares at $622 per share.

Casey's stock had been up 49% YTD, when it hit $900 per share, but it was overbought and got a little ahead of itself. After its last earnings announcement on Sept. 8, the stock got hammered, falling from $750 to $590 per share in just a couple of days.

I'm bullish on Casey's stock long term because they know how to grow their earnings. Earnings per share in Q1 were outstanding, surging 27.7% to $7.37 per share and net income up was 27.1% to $272.7 million. There is explosive growth in prepared foods. Customers love their whole pizza pies. 

Total store count was 2,959 on July 31, 2026, up 15 stores over the previous quarter. Add at least one more location to that store count with the newest store in Topeka, which now has seven Casey's locations.

Kwik Shop had long held a dominating position in Topeka and Kansas, with ties to the Dillon Store empire founded in Hutchinson, Kansas. Kwik Shop and Dillon Stores have been part of Kroger for many years. Then in 2018, Kroger sold Kwik Shop to EG Group, aka, Euro Garages, now going through a rebranding to Cumberland Farms Group. In recent years I have not seen much reinvestment into Kwik Shop. That brought in newcomers like Max's of Huntoon, an Amoco station at 1301 SW Gage, which sells Hunt Brothers Pizza and and specialty coffee. Max's is a first class store owned by Haag Oil Co., a longtime Topeka business.

Casey's General Stores operates in 19 states. Besides fresh pizza, Casey's offers self-service fuel, grocery items and motor vehicle merchandise such as lubricants and motor oil.

The first Casey's store opened in 1968 in Boone, Iowa. In the years following, Casey's found success by opening stores in other small towns across Iowa. Approximately 2/3 of Casey's stores are still found in areas with populations of 20,000 or fewer.

Conclusion

Rising operating expenses is a concern for Casey's management, but this is partly due to rising competitive wages in the grocery/convenience store/retail trade markets. You want workers? You have to pay more for the best and most dependable employees. You certainly can't pay minimum wages.

With the way inflation is eroding our dollar, employees need higher wages to pay for a higher cost of living. So sometimes an employer will have to upgrade wages.

Searches on AI Google showed Casey's wages are $13.00 to $19.00 per hour, with managers and cooks making the higher wages, this is competitive with local retail grocery store environment.

Overall, Casey's is a leader in the convenience store market. They grow by building new stores like the new store in Topeka, or through acquisition. They are converting stores purchased in Texas, upgrading with kitchens, to serve a larger customer base in middle America.

Below are more photos of the new Casey's, 4020 SW 6th St., Topeka: