Caseys General Stores Inc (CASY)

Conclusion

Casey's General Stores operates convenience stores across the United States, selling motor fuel alongside pizza, prepared food, beverages, tobacco and nicotine products. At a price of 692.13 USD on 2026-11-09, the market capitalisation is 25.6 billion USD.

The verdict is overvalued. The price sits above the fair value band of 317.94 to 476.91 USD, with a midpoint of 397.42 USD and a margin of safety of -42.6%. The price-to-earnings ratio of 33.1 compares with a ten-year median of 23.6, and enterprise value to EBITDA of 19.3 with a median of 11.3. The discounted cash flow gives 388.85 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 406.00 USD. The reverse discounted cash flow implies growth of 15.8% a year, while five-year revenue growth was 15.1% and five-year free cash flow per share growth was 14.8%. The price therefore assumes that the recent pace of growth holds.

What holds the case up is the quality of the earnings: free cash flow conversion of 99.8% over five years, a Piotroski score of 9 out of 9, and a return on invested capital of 11.6% against a weighted average cost of capital of 8.5%. What would break it is the valuation itself. The price-to-sales ratio of 1.37 compares with a median of 0.60, the enterprise value to EBITDA premium to its median is 70.8%, and the current ratio of 1.02 with a quick ratio of 0.46 leaves little liquidity cushion.

Financial health

Financial health is green, held up by an Altman Z-score of 6.09 and net debt to EBITDA of 1.72x, while the current ratio of 1.02 is only neutral. The quick ratio is 0.46 and debt to equity is 0.71. Interest coverage is not available because the company does not report its interest expense. The Altman Z-score of 6.09 falls in the safe zone, although the Altman model was designed for manufacturers and Casey's is a retailer. Insolvency risk is low, at about 0.55% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, with free cash flow conversion of 84.0% on a trailing twelve-month basis and 99.8% over five years. The accrual ratio is -7.6%, and stock-based compensation is 0.35% of revenue, leaving free cash flow after that compensation at 583.81 million USD. The share count has fallen by 0.04% a year over five years, which means buybacks have slightly outpaced issuance. The Piotroski score is 9 out of 9. The Beneish M-score is not available. The company beat earnings estimates in all 8 of the last quarters, with an average surprise of 18.0%. Estimate revisions are slightly negative: the current-year estimate changed by -0.1% over 90 days and the next-year estimate by -0.6%, with next-year earnings growth expected at 10.1%.

Profitability

Profitability is green, with every margin above its own ten-year median. The gross margin is 23.8% against a median of 22.5%, the operating margin 5.9% against 4.3%, and the net margin 4.1% against 3.2%. The return on invested capital of 11.6% compares with a weighted average cost of capital of 8.5%, giving a return on invested capital minus cost of capital of 3.0%, and its five-year median is 11.3%. Return on equity is 18.9%, but the DuPont split shows that leverage plays a real part: a net margin of 4.1%, an asset turnover of 1.97x and an equity multiplier of 2.26x. Most of the equity return therefore comes from operations, but the balance sheet adds to it.

Growth

Growth is green. Revenue compound growth is 5.2% over three years, 15.1% over five years and 9.4% over ten years. Earnings per share grew 17.2%, 18.0% and 12.8% over the same windows. Free cash flow per share grew 21.5% over three years, 14.8% over five and 25.4% over ten. Revenue grew in 7 of the 10 comparable years. The three-year revenue figure of 5.2% sits well below the five-year figure of 15.1%, so the recent pace of expansion is slower than the average of the past five years.

Valuation

Valuation is red, and the verdict is overvalued. Against their ten-year medians, the price-to-earnings ratio of 33.1 carries a premium of 40.4% over its median of 23.6, enterprise value to EBITDA of 19.3 a premium of 70.8%, price to book of 6.25 a premium of 70.5%, and price to sales of 1.37 a premium of 129.4%. Price to free cash flow of 39.4 is close to its median of 38.4, a premium of 2.8%. The discounted cash flow gives 388.85 USD per share at a discount rate of 8.9%, and the terminal value makes up 58.8% of it. The reverse discounted cash flow implies 15.8% growth, against 15.1% revenue growth and 14.8% free cash flow per share growth over five years. The dividend yield is 0.34%, with a payout of 13.2% of free cash flow. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target.

Risks

The weakest numbers are the valuation premiums: a price-to-sales ratio of 1.37 against a median of 0.60, and enterprise value to EBITDA of 19.3 against 11.3. If earnings growth slows toward the three-year revenue pace of 5.2%, the reverse discounted cash flow suggests the current price would be harder to justify. Liquidity is thin, with a current ratio of 1.02 and a quick ratio of 0.46, so a sharp fall in cash generation would leave little room. Interest coverage and the Beneish M-score are not available, and the company does not report its interest expense, so the cost of debt of 6.9% used here is an assumption rather than a reported figure. The analysis also lacks a debt maturity schedule and revenue by segment, which limit how far the liquidity and growth conclusions can be pushed.