The intersection of the convenience retail and quick service restaurant (QSR) business models is an interesting one. actively positions itself at this crossroads. Their valuation was priced for perfection before the earnings. With the recent price drop, it is worth taking a look at to see if investors can get some value.

Looking at the information presented on their investor relations page, you can see that has most of their operations in the Midwest. They operate out of 19 states as seen below and are actually the 3rd largest convenience store chain in the nation.

With the war in Iran, gas and diesel prices have gone up and is benefitting from the increased fuel margins. However, that has led to concern among some about the sustainability of said higher fuel margins. Same store sales have also dropped YoY, which is another point of concern among investors.

My thesis on is pretty simple:

1. Investor fears are overblown and led to a dramatic selloff which removed any “excess“ in valuation. A margin of safety is now getting built into the stock with price targets in the $700-$800 range and with a forward PE around 27.

2. Worries over same-store and fuel sales will reverse as the company grows it’s store count, realizes operational efficiencies, and expands both inside-store sales and gross margins through its new 3-year plan.

Looking at the Numbers

reports in 4 different segments including Prepared Food and Dispensed Beverages, Grocery and General Merchandise, Fuel, and Other Services (car wash, lottery, ATM fees, etc.). The main revenue segment in terms of revenue is fuel right now especially with the elevated prices that consumers are paying at that pump.

There is some trepidation among investors and prospective investors about a decline in the fuel margins as oil and gas prices mitigate. In my opinion, these fears are overblown as customers will always need gas and lower prices just means more driving and more filling up.

So there will be supply and demand factors at work to offset any weakness in gas prices.

Quarterly data shows that revenue growth is strong at 24.33% for Q1 2027. Gross profit, operating income, net income and EPS showed declines which I attribute to them fully digesting and branding store acquisitions while aligning with their new 3-year strategic metrics.

With a -$2.4B net cash position, the debt front leaves something to be desired. Reducing the debt from M&A is ideal, but the majority of debt matures in FY 2030 and the average rate is around 4.3%, so not an immediate concern for the company.

With a ramp in revenues and earnings over the coming years, management should be able to tackle this level of debt. Additionally, their target debt to EBITDA ratio is < ~2.0x and they are sitting at 1.5x. Available liquidity sits around $1.4B, so they have plenty of flexibility when it comes to the business.

They will focus on debt repayments when the debt to EBITDA ratio starts exceeding 2.0x.

Operating cash flow reached $384.07 million and capital expenditures stayed pretty much inline with last quarter so free cash flow was $189.68 million. This may seem small now but with disciplined management they should be able to grow this in the future.

Operating and profit margins are low but fairly stable. Gross margins were around 21.82% last quarter and have remained above the 20% mark for many quarters now.

Investors have to watch the operating and profit margins carefully in the upcoming quarters to see how fuel and same store sales are affecting margins. Any disruption in the core business or revenue segments will warrant a re-rating by analysts and my thesis around the business.

3-Year Growth Strategy

This is the new growth strategy presented by management in their investor day presentation. At the top, they list their goal of EBITDA growth of 8-10% supported by everything below the roof if you will.

Management was keen to point out that is part of a select few businesses in this industry that have been able to have an EBITDA CAGR of 8% or greater for the past 10 years.

Their previous 3-year EBITDA CAGR was 16% versus the target of 10%. The main way to keep the EBITDA CAGR up is unit store growth, which will require a balance of M&A and new store builds.

Looking at customer demographics, has done a lot of research on their customers. Their rewards membership model is offering a better customer experience than peers. They have noted that 70% of Casey’s Rewards guests make > $50k per year and many of those guests spend more than guests that are not part of their reward program.

In addition, is driving incremental traffic by introducing new market launch products. They are estimating 17 exclusive and lead market launch items in FY 27. The customer digital flywheel they are introducing is noteworthy as it can streamline customer interactions and produce meaningful synergy with their rewards program.

One of the biggest drivers of growth is the prepared foods segment inside their stores. Their pizzas are a big attraction in these rural towns and areas with game-days producing much higher volume of sales than regular days. It’s going to be interesting to track digital sale growth in this omni-channel approach (Doordash, mobile app, other digital channels) as they keep improving digital experiences.

Wings seem to be the next major prepared food platform to grow as they are a high opportunity / low competition opportunity with ~50% of Casey stores not having a wing chain competitor within 5 miles. Plenty of customers also add wings to their pizza orders which results in larger basket sizes and greater revenue.

There is significant white space in their footprint to support future unit growth, as up to 75% of rural towns in their target distribution area still do not have a Casey’s. They have a case study that suggests that fuel gallons and inside store sales are higher in remodeled stores

In addition, it seems that new builds have significantly better fuel gallon, inside store and EBITDA than existing store locations. Thus it is clear that to increase operational efficiency across the board, management will have to focus on remodeling existing stores, new builds in appropriate locations and streamline operations at all stores whether new build or not.

They will increase the scale of their fuel supply and distribution in stores in the future so that the margins are supported.

Risks and Headwinds

A temporary issue I see with this 3-year model is the costs associated with remodeling all the stores they acquire through M&A. That will drive down the margins from these stores for a bit, but will be a driver of further EBITDA expansion later on.

The Iran war will not last forever, and when it does wind down, the fuel premium should drop and customers will pay less at the pump. I’m not too concerned with this as I think fuel will always be needed, especially in rural towns and areas, to get to convenient locations. You need to drive to get things and services in rural areas as opposed to cities where things are more walkable.

Moreover, if they realize fuel efficiencies and keep their fuel margins higher, then they might be able to stave off a portion of the hit when the war premium does fall off.

A final concern is a general economic downturn driven by lingering inflation. The Fed is already raising rates, but because monetary policy acts on a lag, the economic impact of today's hikes won't fully materialize for 6-12 months. We will have to monitor whether these increases effectively dampen inflation without crushing consumer demand.

Analyst Estimates & Valuation

Moving to analyst forecasts on , the average analyst consensus is a Hold but the price target is notably 32.42% higher than the current price at $790.53 per share. Some analysts have estimates that are over $900 and some as low as $687. But even the lowest estimate is higher than the current price giving some margin of safety in the name.

Projections for future years look good for FY 2027 but less so for FY 2028 and FY 2029. Analysts are anticipating 18.79% revenue growth and 11.46% EPS growth for FY 27. Free cash flow does look good for the next few years which might be the most important metric for a prospective shareholder.

In terms of capital allocation, has been increasing their dividends pretty regularly and also buy back their shares.

My ardent wish is that management sees a discrepancy between fair value and stock price after the earnings as a way to increase value for shareholders by using some of the new $1B share buyback authorization.

As noted in the beginning, I wrote a put on this stock after the large drop post earnings. The risk-reward profile in such a position is high; if I’m assigned shares, I can hold the position or sell covered calls at a higher strike price. If I’m not assigned, I will collect the premium anyways.

As always, my content is not financial advice and you should always do your own due diligence when investing your money.

Share Bearded Investor

has been compared to the of China. And it’s no wonder why. They have the cloud business in AliCloud, the logistics business in Cainao, the e-commerce piece with Tmall and TaoBao. But add to that the AI labs, frontier LLM models, semiconductor/chips and so much more that it may be more apt to compare to a combination of US big tech firms, not just .

I think it would be helpful for my readers (and me) to understand the details of their business before we dive into the financials and more.

What Does Alibaba Actually Do?

is a sprawling empire. If you want to invest in this behemoth, you have to understand it’s pieces along with it’s strengths and weaknesses.

Prior to the August 2026 restructuring, they used 6 groups to organize the business. However, with the latest restructuring, they consolidated into 4 main business groups as shown below.

I’ve included the new business groups and how the current revenue segments are being reported until their next earnings report. One of the most important changes is the new AI Labs and Applications business group that houses the AI model laboratories and LLM models.

The other major changes are the new consolidated Alibaba China E-Commerce Group and T-Head (their semiconductor/chip development business) is now under the AI Cloud and Computing Services group along with Alibaba Cloud.

These 4 business groups are a more consolidated way to report similar business functions and operations. In their own words:

The main cash cow is still the e-commerce segment under Alibaba China E-Commerce Group especially going forward with the integration of domestic and international segments.

Using the old reporting format, you can see the revenue numbers for the different segments up till the restructuring.

* A quick note here that “Eliminations from growth” are adjustments made to subtract internal transactions, divested operations and/or non-operating items so the reported numbers reflect true organic business expansion.

A Snapshot of Financials

Ok, so we have an understanding of the building blocks that make up currently. I want to look at what their financials look like right now including their latest earnings report.

Looking at the Q1 2027 revenue and profits on stockanalysis.com, we see a 8.6% revenue growth YoY with a huge deceleration in the EPS and EPS growth rate to the tune of -79.39%. We will dig into more of the financials to discover reasons for the drop, but gross profit, operating income and net income were all down in the last quarter.

Looking more granularly at business segments, we see a deceleration in the e-commerce business of -8.25% YoY. I think this is mainly due to tough competition from domestic companies in that space, as management attributed this to weaker transaction activities.

Quick commerce saw some nice growth which management attributed to higher average value orders and enhanced fulfillment logistics efficiency while at the same time maintaining their market share. Specifically, they are focusing on high-value food orders and non-food categories.

The real story is the growth in AI Cloud and Compute Services and AI Labs and Applications at 44.94% and 15.82%, respectively. This is a massive amount of growth in these business units, and I could see these groups becoming a larger and larger portion of the total revenue mix.

The newly combined AliCloud and T-Head division is accelerating nicely. In addition, the frontier model portfolio was upgraded recently with adjusted EBITDA loss narrowing QoQ.

I shared in a recent note on that their net cash position is still strong at ~$17.8B. However, the debt they are adding onto their balance sheet is increasing and needs to be monitored just in case we have a situation where net cash dips into the red.

Speaking of red, free cash flows remain negative at -$6.67B. While this is less than ideal, it is par for the course for these big tech players both abroad and here in the US apparently. The negative free cash flow is due to incurring high capital expenditures. They had 75% higher capex YoY in the quarter ended in June 2026, spending roughly $9.975B.

A clear trend is emerging from the data of their last earnings report. They are increasing AI infrastructure spend but developing AI infrastructure, AI models, AI labs, cloud and everything else quickly.

In my opinion, this is the reason for the temporary weakness in their net income, EPS and free cash flow, but will pay off in the long run if we are to believe the AI narrative as a whole.

With the margins, you can see last quarter had a large discrepancy between operating and pre-tax margins which indicates a large amount of non-operating items. In the most recent quarter, it looks like the core business improved and there was less impact from those non-operating items.

Let’s take a look at their operating costs from their investor presentation.

Importantly, it looks like they were able to actually reduce sales & marketing expenses YoY, but the other costs rose slightly. All of these are excluding stock based compensation.

However, the balance sheet still looks strong with net cash around $17.8B, cash and investments around $57.5B and total debt at $39.74B. This is all while their operating cash flow increased and capital expenditures decreased QoQ.

Lottery Tickets With AI & Cloud

Even though there seems to be some pain with negative free cash flow and some deceleration in parts of the main e-commerce business, there are many reasons to be optimistic on .

First, as discussed above, there is the rapid growth in the AI Cloud and Compute Services group. With the addition of T-Head to the business group, this unit is favorably positioned to continue being the largest cloud provider in China with 38.1% of the market in 2025.

Their proprietary chips like the Zhenwu line are being used by over 650 external customers through AliCloud further strengthening the synergies between T-Head and AliCloud.

In addition, they were able to launch a foundation model Qwen3.8-Max within three months of it’s prior version. As of this writing, they are up to a 2.4 trillion parameter model with Qwen 3.8-Max. It seems competitive with domestic rivals like Moonshot AI’s Kimi K3 and DeepSeek. The major takeaway is that they have an impressive fleet of models that do everything from audio, video, reasoning, image, code, multi-modal and more.

QwenWork is their version of agentic AI which works on the organizational and individual levels with it’s deep integration with AliCloud and DingTalk. QwenApp is like their ChatGPT for consumer AI where it is integrating with their e-commerce offerings through Tmall, Taobao and TaoBao Instant Commerce to drive sales and agentic AI use.

This flywheel approach across AI and e-commerce businesses unlocks new growth opportunities; they take that feedback and enhance their models and user experience with it.

On the capital allocation front, until just this past quarter, was retiring shares left and right. They bought back over 200 million shares from FY 2023 to FY 2025. They slowed down the pace a lot in FY2026 predominantly because they reinvested into the business. But if they are able to start buying back shares in earnest again, that will start to drive up EPS.

Competition and Risks

There are real risks to be considered as well. The two main risks I can see are domestic competition with and and geopolitical tensions.

has a good hold on the cloud market share at roughly 38% but and are nipping at the heels with an estimated 16% each currently. If the market share drops aggressively, then the cloud and AI business groups might not be able to offset weakness in the e-commerce business fast enough.

Geopolitics is always an issue when it comes to investing in equities based in foreign countries. Issues like what China will do with Taiwan, tariffs, country-level tech IP and more will dominate investor mindsets when looking at foreign assets. This will definitely impact investing patterns and can be a factor in what a stock may do after a bad or good earnings report.

Analyst Estimates and Valuation

With at roughly $108.6 a share right now, the market cap is around $269B. With an average price target around $186.07, analysts see a 71.4% upside in the stock from the current price.

Looking out to FY 2027 and beyond, analysts are anticipating increasing revenue growth to 14.22% in FY 2029. They also see very strong EPS growth in FY 2027 that tapers off in the following years but which is still higher than revenue growth rates.

Importantly, the projection of free cash flow seems to go positive in FY 2028 and beyond. While it is always difficult to make projections many years out, analysts seem to be positive (no pun intended) on positive free cash flow going forward.

Looking at valuation ratios on stockanalysis.com, what stuck out to me is that the PEG ratio, or P/E over growth ratio, is only 0.41! As a reminder, a PEG ratio of 1.0 is about fairly valued, anything below 1.0 may indicate undervaluation, and anything above 1.0 may indicate overvaluation.

The current PE is 24.48 but the forward PE is at 13.24. This would be a ridiculous multiple if you assigned it to or .

Bottom Line

I like the growth prospects of Qwen, QwenWork, QwenApp, AliCloud and other AI products and services, but I’m also monitoring their core e-commerce business growth. It is truly an amazing company in all that it does and continues to improve upon.

If were to drop more and hit my targets ($90-$100 per share) for acquiring the stock (you have to acquire a great business at the right price), then I would be writing a portfolio update piece right now instead of a deep-dive article. Until then, this remains on my watchlist while I build my capital.

As always, my content is not financial advice and you should do your own due diligence before investing any of your money.

Celsius reported Q2 2026 earnings on August 6th, and it was the kind of print that makes momentum investors head for the exits.

• Revenue: $817.9 million (up 10.6% YoY, but missing consensus estimates of $886 million).

• Adjusted EPS: $0.36 (missing the $0.43 estimate).

• Gross Margin: Compressed to…

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On the face of it, we have a footwear company competing with the likes of , , and other footwear companies. You have almost certainly seen those distinctive hollow pod soles.

Even I own a pair of On shoes, which, to be fair,…

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has been shipping their AI products with accelerated speed taking control of the narrativ…

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Now, did report zero AI capex spend or something drastically different than other mega cap tech names? Not at all. But the difference is how they have locked in massive future revenues through customer commitments, have a high-growth cloud business to absorb AI capex, and the ability to deliver actual revenue from that capex through advertising and selling that compute to customers.

Let’s first look at their earnings results from this past quarter. I have shared quick earnings results on my social platforms (definitely follow my social accounts to get the latest information very quickly), but here they are once more so we can have them as a reference.

For this analysis, I used an un-levered beta of 1.55 (software internet industry) which was re-levered to 1.37 using the Hamada equation. In addition, I also used an ERP of 4.5% (for US equities), an effective tax rate of 17.61%, and a risk free rate of 3.76%.

Please refer to Stock Analysis for all the data I used in this analysis.

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For this analysis, I used an un-levered beta of 1.23 (internet application and software industry) which was re-levered to 1.18 using the Hamada equation. In addition, I also used an ERP of 4.5% (for US equities), an effective tax rate of 14.5% based on CFO commentary, and a risk free rate of 3.76%.

Please refer to Stock Analysis for all the data I used in this analysis.

I used the long dated bond rate for which is 4.875% for the pre-tax cost of debt as of the writing of this analysis. Now with those parameters out of the way, here is the company guidance.

They are guiding for a second quarter revenue of $59.5 billion (midpoint) which is only slightly above analyst expectations and largely inline. Total expenses remain unchanged which is telling because that indicates that the increase in capex is largely due to component pricing increases rather than spending more to acquire more compute.

Even so, $125-$145 billion is a large amount of capex for internal use AI that is not directly sold to customers and consumers. For that reason, the stock is getting hammered post earnings. In addition, looking at the DAP (daily active people) metric, which is arguably the most important metric for as they require people to view and click on ads which fund their advertising business, it’s clear that there were extenuating circumstances.

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For this analysis, I used an un-levered beta of 1.23 (internet application and software industry) which was re-levered to 1.16 using the Hamada equation. In addition, I also used an ERP of 4.5% (for US equities), an effective tax rate of 26.15%, and a risk free rate of 3.76%.

Since the interest expenses are not available for on Stock Analysis, I used the 2030 bond rate for which is 4.73% as of the writing of this analysis. Now with those parameters out of the way, here is the company guidance.

As you can see for their FY 26 guidance, management describes full year guidance for subscription revenues only not the professional/other revenues. Based on this, I used a 22.25% revenue growth rate for both subscription and other revenues as an approximation for Year 1.

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For this analysis, I used an un-levered beta of 0.77 (consumer services industry) which was re-levered to 0.85 using the Hamada equation. In addition, I also used an ERP of 4.5% (for US equities), an effective tax rate of 6.00%, and a risk free rate of 3.76%.

Since the interest expenses are not available for on Stock Analysis and does not have 10 year bond rates, I searched for analyst’s estimates for the pre-tax cost of debt which is ~7.2% as of now. Now with those parameters out of the way, here is some information from the company’s investor presentations and earnings.

For their 2026 guidance, management describes several ranges for key metrics and I use the midpoint of those just like the other analysis I have done. Based on this, I used a 16.5% revenue growth rate and a 10.08% operating margin for Year 1.

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Since the interest expenses are not available for on Stock Analysis, I used the 10-year (2036) Salesforce bond maturity rate for the pre-tax cost of debt which is 5.55%. Now with those parameters out of the way, here is some information from the company’s investor presentations and earnings around FY 27 guidance.

In their FY ‘27 (2026) guidance, management describes several ranges for key metrics and I use the midpoint of those just like the other analysis I have done. Based on this, I used a 10.5% revenue growth rate and a 20.9% operating margin for Year 1.

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management put out guidance for Year 1 financials (2026), in their February update for Q4 2025 and full year 2025 results presentation.

In this 2026 guidance, they offer ranges of values for several key metrics of which I use the midpoint in the subsequent calculations. Using these numbers, I derive a revenue of ~$1.69 billion, operating margin of ~2.37%, and capex (sustaining and project capex) of ~$172.5 million.

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I used an un-levered beta of 1.23 based on Aswath Damodaran’s work for a software application/service company industry. This beta was re-levered to 1.18 using the Hamadi equation.

Effective tax rates, pre-tax cost of debt and base year drivers were all calculated using TTM or most current data pulled from stockanalysis.com.

The ERP or equity risk premium was 4.5 for equities centered in the US. Base year revenue growth was calculated with the TTM financials and came in at 10.96% growth. Let’s look at how I structured stage 1 of the DCF projection:

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A un-levered beta of 1.35 was used based on Aswath Damodaran’s work for semiconductor equipment providers. This beta was re-levered to 1.23 using the Hamadi equation. Effective tax rates, pre-tax cost of debt and base year drivers were all calculated using TTM or most current data.

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