CASEYS GENERAL STORES INC (CASY) stock intrinsic value fair value estimate & owner earnings analysis

Casey's runs 2,944 convenience stores in 19 states (about half in Iowa, Missouri and Illinois), roughly 71% of them in towns under 20,000 people, where it is often the only real food-and-fuel stop. It owns substantially all of its stores and supplies them from three of its own distribution centers. Fiscal 2026 (April year-end): revenue $17.6 billion, net income $714 million, operating cash flow $1.38 billion. About a third of gross profit comes from fuel and the rest mostly from prepared food (58.6% gross margin) and groceries. Fuel is the soft spot: Casey's earned 42.6 cents a gallon in fiscal 2026, against 38.7, 39.5, 40.2, 36.0, 34.9, 26.8 and 20.3 in the prior years back to fiscal 2019. On roughly 3.5 billion gallons, each cent is about $35 million before tax, or about $0.72 a share a year. Earnings level. We measure what owners could take out each year: operating cash flow, less the swing in working capital (fuel-price-driven payables and inventory), less stock compensation, less maintenance capital spending. Total capital spending ($656 million in fiscal 2026, against $450 million of depreciation) includes new stores, so only the maintenance share is deducted; the rest is treated as growth, and our growth credit is limited to what that spending is already paying for. Interest is then added back so the business can be valued before its lenders and net debt subtracted afterward. Cash earnings per share before interest were about $13.00, $12.48, $17.75 and $21.89 in fiscal 2023 to 2026 (fiscal 2022 shows $17.64 but the maintenance-capital estimate that year is distorted by a fuel-price surge in revenue, so we excluded it). We anchor on the median of fiscal 2024 to 2026, $17.75 a share, because the 198-store Fikes/CEFCO purchase (November 2024) and the current store base are best described by those years. The anchor sits below fiscal 2026, which was lifted by the 42.6-cent fuel margin (which the company itself called historically above average), renewable-fuel credits of $35.4 million versus $16.7 million, and an $8 million one-time gift-card adjustment. The first quarter of fiscal 2027 (net income up 27%, fuel margin 47.8 cents) does not move the level; one quarter, and the same fuel-margin condition, is not corroboration. Growth credited. Trailing owner earnings growth was +22.7% in fiscal 2026 (largely fuel margin, a full year of Fikes and credits); the base case assumes +1.5% in year 1. What is credited is new-store construction: 48 stores built in fiscal 2017 and about 40 net adds in fiscal 2026, every year, funded from its own cash, through the 2020 shutdown (1,978 stores in 2017 to 2,944 now). Left out: same-store sales gains (offset by wage and cost inflation), margin expansion, prepared-food mix gains, further acquisitions, EV charging (282 chargers at 64 stores) and any lift to fuel margin. Base case: cash earnings before interest grow 1.5% a year for ten years to about $20.60 a share, with fuel margin held near 38.7 cents, then stay flat for twenty more years (owned stores kept up by the maintenance spending we already deduct) and end after year 30 because nothing evidenced carries beyond that. The business is worth about $281 a share. It owes about $52 a share net, leaving about $229. Debt. Borrowings were $2.43 billion at July 31, 2026 (including $115 million of finance leases), against $524 million of cash, of which we treat $150 million as needed to run stores. $1.44 billion is fixed-rate senior notes at 2.85% to 5.43%, which cost less than market rates; we lowered debt by about $117 million for that. About $1.0 billion is variable-rate term loans, with $200 million due in installments through April 2028, $250 million of notes due August 2028 and $797 million of term loan due by October 2029. Operating leases are left out because their cost already runs through operating cash flow. Net debt of about $1.9 billion is under 1.5 times a year's operating cash flow, and interest was covered several times over in every case. Bear case: fuel margin falls back toward the 2019-2020 record (20.3 and 26.8 cents) rather than the recent range, to 28 cents for four years (fiscal 2029 to 2032) and 32 cents afterward, with only 1% growth. Cash earnings fall from about $18 to $10.60 a share at the trough, recovering to about $14.80, and the story ends after year 25 (EV adoption would be eroding gallons by then). The business is worth about $188 a share, owes about $52, leaving about $136. At the trough the business still produces about $400 million a year against roughly $110 million of interest, so the maturities above could be refinanced, though likely at higher rates. Bull case: fuel margin holds at 41 cents (the fiscal 2023-2026 average is 40.3), unit growth of 3% a year for ten years (the nine-year record is about 3% including small acquisitions) while paying about $4 a share a year for those acquisitions, and cash flows lasting forty years. The business is worth about $341 a share, owes about $52, leaving about $289. What we tried to break. The load-bearing assumption is that fuel margin stays in the recent range. Evidence for: six straight years above 34 cents, same-store gallons +1.4% in fiscal 2026, and Midwest EV demand the company calls comparatively low. Evidence against: the company says the margin fluctuates significantly and sometimes unpredictably, and management described daily margins swinging between roughly 30 and 60 cents in the latest quarter. We kept the base at the anchor year's level and put the reversion in the bear case. Cigarettes and tobacco average about 9% of revenue and face regulation; we gave no growth for that line. Previous figures (bear $104, base $303, bull $486) were built on a different basis and are not comparable; what has changed in the business since is a full year of Fikes, higher fuel margins that we treated as temporary, and a plan for about 120 more stores in fiscal 2027 that we did not credit beyond new construction. We could not independently reconcile the exact maintenance share of capital spending, which is the company's own undisclosed split, so we estimated it from the revenue-growth relationship and cross-checked against depreciation. Margin-of-safety price. We are fairly sure of the inside-the-store earnings, which are over half of gross profit, and much less sure of fuel margin, which has ranged from 20 to 43 cents in eight years. The worst plausible outcome is a multi-year fuel-margin slide of the 2019-2020 kind; the business would survive it: it owns substantially all of its stores, net debt is modest relative to cash generation, and no covenant is in sight. If we are wrong on fuel margin, growth or how long the cash flows last, the shares are worth about the bear figure. The price assumes a holding period of about three years, with a small dividend and about $13 a share a year of retained cash that reduces debt. From $150 a share, the base case implies roughly a 20% annual return over three years, the bear case implies roughly break-even, and the bull case implies well above 20%. The margin-of-safety price is $150.