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Casey's General (CASY) is heading modestly higher after reporting its Q3 (Jan) results last night. The company extended its streak with another sizable double-digit EPS beat, although revenue missed expectations, increasing just 0.3% yr/yr to $3.92 bln. On the positive side, CASY raised its FY26 outlook, now expecting EBITDA growth of 18-20%, up from 15-17%, and inside same-store sales growth of 3.5-4.5%, up from 3-4%.

• Inside same-store sales increased 4.0%, up from 3.3% in Q2, supported by continued traffic growth.
• Prepared food and dispensed beverages led the way with same-store sales up 4.3%, compared with 4.8% in Q2, while grocery and general merchandise accelerated to 4.0% from 2.7%.
• Importantly, CASY continues to attract customers across all income cohorts. While the upper income cohorts remain stronger, CASY stressed that it is growing across lower income cohorts as well.
• Inside gross margin expanded 130 bps yr/yr to 42.2%, with prepared food and dispensed beverage margin up 50 bps to 58.3% and grocery and general merchandise margin up 150 bps to 35.7%, driven by improved cost management and favorable mix.
• This continued inside strength is helping drive a sharp increase in profitability, with EBITDA increasing 27.5% to $309 mln and EPS jumping 50% to $3.49.
• Fuel sales fell $57 mln yr/yr even as same-store gallons increased 0.4%, as a 2.3% increase in total gallons sold was more than offset by a 4.6% decline in the average retail price.
• CASY addressed volatile fuel prices, saying it typically does not see demand destruction until prices approach $5 per gallon, with prices currently around $3 across its footprint. CASY added that fuel margins can be compressed early in the cycle but typically expand on the back end.

Briefing.com Analyst Insight

While the revenue miss likely weighed initially, this was another encouraging quarter from CASY. Comp sales remained healthy and improved sequentially, as CASY continues to attract customers to its stores. Importantly, it continues to grow across lower-income cohorts, supporting the view that its value proposition remains compelling. Additionally, while the top line was softer, that appears to have been driven more by the decline in fuel rather than weaker underlying demand. Despite that, CASY's profitability continues to improve significantly, supported by healthy inside sales growth and continued inside margin expansion. This ultimately led to another increase in its EBITDA growth outlook, and it was also encouraging to see management raise its inside same-store sales outlook after tightening it last quarter. Overall, the quarter reinforces that CASY continues to execute well and highlights the strength of its operating model, even if the headline growth was softer.