Brad Thomas
Founder & Lead Analyst of Wide Moat Research
Casey's General Stores is getting interesting after a 15% drop, with store growth and owned real estate supporting value, though 25x earnings would be the preferred entry. It targets 120 new stores in FY27, and remodeled CEFCO sites see about 30% prepared food and dispensed beverage lifts. It owns 2,703 of its 2,944 stores, worth roughly $6.8B at $2.5M each, about 25-35% of its equity value, offering sale-leaseback optionality. x.com x.com x.comÂ
Casey's General Stores is a buy on its 15% dip because its moat, a top-five pizza chain inside a convenience store, will outlast fading peak fuel margins. It beat EPS by a wide margin, and 3.2% inside comps hide a 7.7% two-year stack and a 42.2% inside margin. Management reaffirmed 2-5% inside comps, 8-10% EBITDA growth and 120+ new stores, with a three-year plan for 400 stores and $2B of FCF after over-delivering last time. The Street sees $800-$840 versus about $622 now. x.comÂ
Casey's General Stores is a quiet compounder built on roughly 2,900 local monopolies in rural Midwest towns too small for rivals, where fuel draws traffic and fresh pizza earns the profit. About half its stores sit in towns under 5,000 people, and it is the fifth-largest US pizza chain. Inside margins run 41-42%, FY2025 revenue was $15.9 billion, and recent EPS grew 14-20%. It plans about 500 more locations over three years and has raised its dividend for 25 straight years. x.comÂ
Casey's General Stores is not a buy despite its largest drawdown since 2008, because its valuation had become historically stretched beforehand. A 33.6% fall from highs, per Fiscal.ai, looks like a deal only until that prior valuation is considered. There is no interest in adding at current levels, and no fear of missing out if the stock does not go lower. x.comÂ
Yesway's IPO looks unappealing: its financials, debt and business model are unimpressive, and its Texas-heavy Allsup's stores lack the differentiation of Casey's food or Murphy USA's no-interior format. Ordinary convenience stores are struggling, with many 7-Elevens and Circle Ks closing. It first filed for an IPO in October 2021 but never completed it. It isn't fully ruled out. x.comÂ
First Watch is growing with self-funded discipline while the market is on edge about the consumer. Q2 2026 same-restaurant sales rose 3.4%, a 6.9% two-year stack, both beating guidance and peers. It committed to funding future growth from organic cash generation at roughly 50 new stores a year. x.comÂ
Restaurant Brands International has been getting more attractive, with big operational changes underway behind the scenes. x.comÂ
CAVA's results defy restaurant downturn fears: Q1 same-store sales rose 9.7% versus 6.0% expected, helped by its new pomegranate salmon dish, and every Q1 metric beat. The CFO says Q2 comps are tracking in line with Q1, far above the Street's 4.7%, while full-year comp guidance rose to 4.5-6.5% and adjusted EBITDA guidance to $181-191M. Short interest of 13% should add to strength on the beat. x.com x.comÂ
Restaurant chains such as Chipotle, Starbucks, Texas Roadhouse, Domino's and Wingstop are relatively easy to buy and hold for many years because they face no major tech disruption. Competition has always been strong, but growing by opening more physical locations is a clear and simple way to compound. Their shares are directly linked to consumer sentiment, which makes that chart worth following. x.comÂ
Texas Roadhouse is a truly great company but a bit rich at 25x even the lowest forward earnings estimates, making it a tough call. x.comÂ
