Casey's General Stores (NASDAQ:CASY) will release its quarterly report on Monday, and investors have bid the stock to all-time record highs. With Casey's earnings showing ample growth, those gains seem justified; but how far can the company run before its growth has to slow down?

Casey's business isn't particularly glamorous, as you'll find its convenience stores and gas stations throughout 14 states in the U.S. Midwest. But the company has nevertheless found a solidly profitable niche, with about 1,750 stores helping to bring in regular cash flow. Let's take an early look at what's been happening with Casey's over the past quarter, and what we're likely to see in its report.

Stats on Casey's

 

 

Analyst EPS Estimate

$1.26

Change From Year-Ago EPS

25%

Revenue Estimate

$2.10 billion

Change From Year-Ago Revenue

12.3%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

How high can Casey's earnings fly?
In recent months, analysts have continued to get more optimistic about Casey's earnings, raising July quarter estimates by almost $0.10 per share, and boosting full-year projections by $0.14 per share. The stock has responded favorably, gaining 11% since early June.

Casey's didn't overwhelm investors with its April-quarter report. The company reported flat earnings per share for the quarter, citing bad weather and a tough cigarette market for a 0.2% drop in same-store sales in the grocery and other-merchandise category. Prepared-food comps were up 4.4%, but that rise was far slower than the double-digit growth seen in previous quarters.

Yet, convenience stores have gotten more attention lately as integrated refiners have looked for ways to streamline their operations, spinning off their chains of affiliated gas stations. In April, Valero Energy (NYSE:VLO) completed its spinoff of its network of 1,900 convenience stores and gas stations into CST Brands (NYSE:CST), giving Valero the ability to concentrate on its refining business. But for Casey's and other convenience-store operators, an independent CST will be more focused on its own business, ramping up potential competition. Integrated oil companies Murphy Oil and Hess are also considering spinoffs or sales of their gas-station networks in order to refocus their efforts on their core businesses and unlock value.

A key measure of success for Casey's is managing fuel costs. Peer Susser Holdings reported last month that its retail fuel margins had fallen substantially in its second quarter from year ago levels, falling below average margin levels for the past five years. With Casey's having reported strong fuel margins in its April quarter, a decline could leave investors nervous about the future.

In Casey's earnings report, watch to see how well the company's various break-out categories perform. If the industry keeps doing well, then you might see consolidation activity start to rise in order to bring local networks together to create new national convenience-store powerhouses that could represent a big growth opportunity down the road.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.