Investment Bank Raymond James Bullish on Yesway, Bestowing ‘Outperform’ Rating

Raymond James has initiated coverage of the Yesway convenience store chain with an outperform rating and $30 target price, highlighting its new-store growth and rural footprint, the investment bank said Monday in a report.

Yesway, which went public in April, is now trading above its $20 offering price at $25 to $26 per share.

Consistent same-store fuel volume and inside sales, along with anticipated network growth to 550 stores by 2030 from about 419, support “solid” Ebitda growth, Raymond James said. The company operates under the names Yesway and Allsup’s, with about 80% of its store base under the Allsup’s banner.

“Relative to its publicly traded peer set, Yesway has demonstrated solid same-store merchandise and fuel trends, ranking as the second-best public operator over the past 16 quarters, trailing only Casey’s,” the report said.

About 73% of the retailer’s stores are in populations under 20,000 and 43% in populations of less than 5,000, which the bank’s analysts see as an advantage. The company’s scale gives it an edge over smaller independents in those markets.

In rural areas, there is also less-intense competition, more-stable demand and favorable fuel margin dynamics. “Driving patterns are more necessity-driven and less discretionary,” the report said.

Yesway has an above-average diesel volume representing 36% of total gallons sold, which suggests demand is closely tied to essential, commercial activity. The new stores it is now building triple the fuel volume of older stores.

The company’s new store model is “highly productive.” With higher fuel volume and merchandise sales, the larger format stores generate a two to three times higher contribution margin than legacy stores, the bank said.

Raymond James believes Yesway’s target of 550 stores by 2030 is achievable. The bank expects unit expansion will be the primary source of long-term earnings growth.

“We expect improving unit-level economics as the mix shifts toward higher-return NTI stores,” the report said.

The bank forecasts a 12% year-over-year increase in 2026 adjusted Ebitda to about $209 million and slightly lower 2027 adjusted Ebitda of $206 million because of potentially strong comparisons with the first half of 2026.

“There is likely upside to our fuel margin estimates in the second and third quarters of 2026 if crude oil prices decline over the near term [which generally results in higher margins],” the bank said.

Certain risks keep Raymond James from bestowing a more bullish outlook for Yesway.

“We believe additional proof points are required to support expansion beyond the medium term, particularly around the scalability of Yesway’s current offering across a broader set of consumer demographics,” the report said. “While the Allsup’s platform provides strong regional appeal [known for its fried burrito offering and value pricing], it remains less proven as a traffic driver outside its core Southwest footprint, suggesting that expansion into new markets will require continued execution and adaptation.”

Yesway could also face competition from Casey’s General Stores, known for rural marketing and food service, as well as value-oriented competitors like Murphy USA, Costco and Walmart.

Fuel is a “meaningful” contributor to earnings, representing 42% of gross profits. Though the bank expects modest margin expansion over time, fuel consumption could decline faster than expected because of increases in fuel economy, electric vehicle adoption and competition within the fuel industry. Lower fuel price volatility also could constrict margins.

Reporting by Donna Harris, dharris@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com