Casey’s General Stores delivered another quarter of sharply higher profit, but a slowdown in sales at existing stores triggered one of the stock’s steepest declines in years as investors looked past the headline revenue growth.
Fiscal first-quarter revenue jumped 24.3% to $5.68 billion, while net income increased 27% to $273.7 million. Diluted earnings reached $7.37 a share, up from $5.77 a year earlier and comfortably ahead of Wall Street expectations.
Inside same-store sales told a less impressive story.
Comparable sales across food, beverages, grocery and general merchandise increased 3.2%, slowing from 4.3% a year earlier and falling short of the roughly 4% growth investors had expected. Same-store fuel gallons declined 0.3%.
Casey’s also kept its full-year outlook unchanged despite the earnings beat.
Shares fell 14.2% the day after the report to $629.03, after closing at $733.49 before earnings. By Monday, the stock had slipped further to $621.61, leaving it roughly 15% below its pre-earnings level.
The selloff is less about a weak quarter than about where the growth came from.
Revenue Growth Overstates the Change in Demand
Casey’s $1.11 billion year-over-year increase in quarterly revenue was driven heavily by gasoline.
The average retail fuel price rose 33% to $3.99 a gallon from $3.00 a year earlier, according to management. Retail fuel sales increased by roughly $991 million.
Total gallons sold were also up 2.5%, helped by a larger store base, even though fuel volume at stores open long enough to be included in comparable results declined slightly.
Casey’s operated 2,959 stores at the end of July, 64 more than a year earlier.
Inside sales provide a better measure of what customers were actually doing in stores. They rose 5.6% to $1.78 billion overall, but part of that increase also came from additional locations.
The underlying consumer picture was still positive, just slower.
Prepared food and dispensed-beverage same-store sales grew 4.8%, down from 5.6% a year ago. Grocery and general merchandise increased 2.7%, compared with 3.8% previously.
Prepared food remained Casey’s strongest category.
Transactions increased by more than one percentage point, unit volume rose nearly 4% and whole-pizza sales were up nearly double digits. Management said most of the comparable-sales growth came from traffic rather than price increases.
Beer was a notable weak spot, while energy drinks and nicotine alternatives continued posting double-digit growth.
Fuel Margins Covered for Softer Volume
The quarter was much stronger from a profitability standpoint.
Casey’s earned 47.8 cents per gallon on fuel, up from 41 cents a year earlier. Total fuel gross profit increased 19.6% to $446.9 million even though same-store gallons declined.
That performance was particularly strong compared with the broader Mid-Continent market. Management cited industry data showing regional fuel gallons down roughly 6%, suggesting Casey’s continued gaining share despite its own modest volume decline.
Inside profitability also improved.
The overall inside margin increased 30 basis points to 42.2%, while the prepared-food and dispensed-beverage margin expanded to 59.3% from 58%.
Lower cheese costs, favorable product mix and cost management helped.
Together, stronger fuel margins and food profitability pushed quarterly EBITDA up 17.1% to $485.1 million.
The problem for investors is that fuel margins can be volatile.
Casey’s already said its August fuel margin had moved back into the low-40-cent-per-gallon range. If the unusually strong first-quarter profitability normalizes while same-store sales remain around 3%, earnings growth could become less spectacular.
That helps explain why the stock sold off despite the earnings beat.
Fikes Remodels Distorted the Comparable Numbers
There was also a temporary headwind inside the same-store figures.
Casey’s is converting stores acquired through its Fikes Wholesale transaction from the CEFCO brand to Casey’s. About 1% of the company’s store base experienced construction-related disruption during the quarter.
Management estimated those remodels reduced inside same-store sales growth by approximately 0.25 percentage point and fuel comparable gallons by about 0.5 percentage point.
The early performance of completed conversions has been considerably stronger.
Management said remodeled CEFCO locations have produced prepared-food sales increases exceeding 30% from their pre-conversion levels, even though the acquired stores already had relatively strong food businesses.
That creates a credible argument that part of the first-quarter slowdown is temporary rather than evidence that Casey’s core consumer is suddenly weakening.
It does not completely erase the miss. Even after accounting for remodel disruption, same-store inside growth would have remained below what investors had expected.
Costs Are Moving Higher Too
Operating expenses increased 8% to $754.1 million.
Running more stores accounted for roughly two percentage points of the increase. Higher credit-card fees contributed another 1.5 percentage points, partly because elevated gasoline prices increase the dollar amount being processed through card networks.
Employee expenses also rose as wage rates increased, although same-store labor hours were roughly flat despite stronger prepared-food demand.
That productivity is important because Casey’s is simultaneously trying to expand its store base, integrate acquisitions and protect margins.
The company generated $384 million of operating cash flow during the quarter and spent $194 million on property and equipment. It ended July with $524 million in cash and approximately $1.4 billion of total available liquidity.
Guidance Now Carries More Weight
Casey’s maintained its fiscal 2027 outlook for inside same-store sales growth of 2% to 5% and fuel gallons between a 1% decline and a 1% increase.
EBITDA is still expected to grow 8% to 10%. Operating expenses are projected to rise 5% to 7%, while the company plans to open at least 120 additional stores through acquisitions and new construction.
Capital spending is expected to reach roughly $800 million.
Management said August same-store trends remained consistent with the first quarter and within its annual guidance ranges. Casey’s normally waits until its second-quarter report, after its seasonally strongest period, before updating annual forecasts.
That makes the next report unusually important.
The first quarter showed that Casey’s can still produce strong earnings even when comparable sales slow because prepared-food margins, fuel economics and store expansion are working in its favor.
The market now wants evidence that those profit drivers are sustainable.
If inside same-store sales accelerate as Fikes remodel disruption fades while prepared-food traffic remains strong, the first-quarter miss will look far less concerning. If comparable growth stays near 3% while fuel margins retreat toward normal levels, Casey’s will have a harder time producing the kind of earnings surprises investors had become accustomed to paying for.