Casey’s General Stores: Long-Term Growth Runway Appears Favorable, but Shares Not Cheap

We initiate coverage on Casey’s General Stores with a fair value estimate of $280 per share and a narrow economic moat rating. We think Casey’s is well-positioned to continue benefiting from a structurally higher fuel margin environment (around 40 cents per gallon) while increasing in-store comparable sales at a low- to mid-single digit pace as its attractive assortment of grocery items and prepared food allow it to take market share from small independent peers. Despite our favorable outlook, we think shares look rich and think it’s wise to wait for a more attractive entry point.