Casey's General Stores Has Fallen 10% Since Reporting Earnings. Is It a Buy in November?
Key Points
Casey's General Stores reported strong numbers on the top and bottom lines in the first quarter of fiscal 2026.
The stock fell as same-store sales were slightly weak, but the drop wasn't enough to alter the valuation story.
Casey's General Stores (NASDAQ: CASY) is a fast-growing convenience store chain, but investors weren't particularly excited by its fiscal first-quarter 2027 earnings results. Even after regaining some ground, the stock is still down 10% from its pre-earnings level as of this writing. That's probably not enough of a decline to make this stock worth buying as November gets underway. Here's why.
Casey's General Stores did OK
Casey's General Stores' business didn't fall off a cliff in the fiscal first quarter of 2027. Earnings rose 27% year over year, with same-store sales (excluding gasoline) up 3.2%. That's not exactly bad, given that consumers are increasingly watching their budgets, but the same-store sales growth rate was lower than a year ago and the lowest in five quarters. Meanwhile, gallons of gasoline sold fell slightly year over year, which is notable because fuel sales are what get people into a Casey's store.
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But a 10% price drop may still seem a bit extreme. Until you take valuation into consideration. Even after that drop, Casey's General Stores' price-to-sales ratio is 1.3x compared to a five-year average of roughly 0.8x. Its price-to-earnings ratio is 32x, compared to a five-year average of 26x. Basically, this retailer's stock still looks expensive, suggesting the drop was driven more by investor sentiment than anything else.
So the bigger issue is really that investors clearly have high expectations for Casey's General Stores. Falling short in the slightest way can turn into a negative event in such situations. That dynamic was on clear display when the company reported its fiscal first-quarter 2027 earnings. Perfection is often the only way to keep an expensive stock moving higher, but perfection is an impossible expectation of any company. Casey's is still growing its business, with plans to open or acquire 120 new locations in fiscal 2027. However, it is clear that investors are increasingly concerned that too much good news has been priced into the stock.
Probably best avoided by most investors
Casy's General Stores' yield is a paltry 0.4%, so income investors won't be interested. As noted above, the stock looks expensive historically, so value investors won't like it either. That leaves growth investors, but the post-earnings price drop suggests even they are getting worried that the company's growth prospects won't live up to expectations. In other words, only the most ardent fans of Casey's General Stores will probably want to step into this stock in November.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Casey's General Stores. The Motley Fool has a disclosure policy.