Is Casey’s General Stores Riding an Unsustainable Rally?

Casey's General Stores shares are experiencing significant price swings as major investors reposition their holdings. The landscape reveals a divided institutional view, with one prominent firm making a substantial addition to its position while others have scaled back their exposure. Meanwhile, a key insider transaction and concerning valuation metrics suggest potential overheating in the current stock price.

The company delivered an impressive first-quarter performance for fiscal 2026, with earnings per share reaching $5.77—significantly surpassing the $5.02 consensus estimate. Revenue climbed to $4.57 billion, representing an 11.5% year-over-year increase and exceeding analyst projections.

Looking ahead, market experts anticipate 12.5% profit growth for the current fiscal year. The upcoming quarterly report scheduled for December 8 will provide crucial evidence about Casey's ability to maintain this momentum.

Management's expansion strategy remains aggressive, targeting at least 80 new store openings during 2026. This initiative forms part of a broader three-year plan encompassing 500 total location expansions. Concurrently, the company aims to achieve 2-5% comparable store sales growth while maintaining stable profit margins.

Institutional Investors Show Diverging Views

Recent regulatory filings reveal contrasting approaches among major investors. Allworth Financial LP dramatically increased its Casey's position during the second quarter, expanding its holdings by 84.9%. The acquisition of an additional 555 shares brought the total value of their investment to $617,000.

Should investors sell immediately? Or is it worth buying Casey's General Stores?

This bullish stance wasn't universal across institutional players. Bailard Inc. reduced its exposure by 29.4%, disposing of 915 shares in the process.

The most notable transaction came from insider Chad Michael Frazell, who demonstrated skepticism through a substantial sale of 3,487 shares at an average price of $555.40. This $1.94 million transaction decreased his position by 30.37%.

Valuation Concerns Emerge

Despite a modest 0.285% gain to $538.19 on Friday, the trading session revealed underlying volatility with shares fluctuating within a $2.40 range between $534.33 and $547.16. While the stock has advanced 4.87% over the past two weeks, it remains 7.8% below its October 10 all-time high of $567.48.

Fundamental analysis raises warning flags about current valuation levels:

• The price-to-earnings ratio stands at 34.54
• Fair value calculation based on 10-year metrics suggests $307.10 per share
• Current trading price exceeds fair value by 70.3%

The central question for investors remains whether the company's growth trajectory can justify such a substantial premium. With shares trading 70% above calculated fair value, the success of Casey's expansion plans becomes critical—any misstep could trigger a significant price correction.