Casey's General (CASY, Financial), a leading gas station and convenience store operator, has once again surpassed EPS expectations in Q3 2025, driven by increased profits in both its inside and fuel sectors. CASY has exceeded EPS forecasts for the past seven quarters and notably beat revenue expectations this quarter, a rare achievement considering it had missed top-line forecasts in three of the previous four quarters. This volatility is mainly due to fuel price fluctuations affecting margins.
Concerns over economic growth and tariffs have impacted CASY shares, which had fallen by about 15% since mid-February before today's gains. A slowing economy could reduce fuel demand as travel decreases, and customers might cut back on non-essential purchases like snacks. However, CASY's strong results and slightly improved FY25 EBITDA guidance, now projecting 11% growth from the previous 10%, are alleviating some macroeconomic concerns.
Fuel operations showed strength with same-store fuel gallons increasing by 1.8% and total fuel gross profit rising over 17% to $302.1 million. Despite a slight drop in retail fuel prices during the quarter, the fuel margin per gallon remained stable at $0.364. The primary growth catalyst was CASY's acquisition of Fikes Wholesale last November, adding 198 stores across Texas, Alabama, Florida, and Mississippi, bringing its total to nearly 2,900 stores.
In the convenience store segment, CASY achieved robust inside same-store sales growth of 3.7%, showcasing its brand strength and competitive edge in prepared foods like made-from-scratch pizzas and breakfast items. Additionally, the company experienced notable growth in dispensed beverage sales.
Despite the strong Q3 performance, CASY maintained its FY25 guidance for same-store inside sales and inside margin, expecting growth of 3-5% and margins comparable to last year's 41-42% level.
CASY posted solid Q3 results with EPS of $2.33, matching last year's figure, and a 17% revenue increase driven by strong inside sales growth and the Fikes Wholesale acquisition. However, risks remain, particularly with weakening travel demand, as indicated by major airlines lowering their Q1 outlooks.
