Star Gas Partners (SGU) AI Stock Analysis

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Star Gas Partners

(NYSE:SGU)

Rating:72Outperform

Price Target:

$13.50

▲(15.48%Upside)

Star Gas Partners is on a stable financial trajectory with improved profitability and operational efficiency, which is the most significant factor in its score. The valuation is attractive with a low P/E ratio and high dividend yield, providing additional strength. Technical indicators present mixed signals but are not overly concerning. The positive earnings call further supports the company's growth outlook.

Star Gas Partners (SGU) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$404.08M

Dividend Yield6.33%

Average Volume (3M)35.17K

Price to Earnings (P/E)6.8

Beta (1Y)0.32

Revenue Growth2.38%

EPS Growth114.29%

CountryUS

Employees3,039

SectorEnergy

Sector Strength74

IndustryOil & Gas Refining & Marketing

Share Statistics

EPS (TTM)2.01

Shares Outstanding34,565,975

10 Day Avg. Volume37,750

30 Day Avg. Volume35,169

Financial Highlights & Ratios

PEG Ratio-0.16

Price to Book (P/B)-19.48

Price to Sales (P/S)0.00

P/FCF Ratio19.99

Enterprise Value/Market Cap1.42

Enterprise Value/Revenue0.08

Enterprise Value/Gross Profit1.08

Enterprise Value/Ebitda1.20

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Star Gas Partners Business Overview & Revenue Model

Company DescriptionStar Gas Partners, L.P. is a leading distributor of home heating oil in the United States. The company operates through its subsidiaries, providing heating oil, propane, and other related services to residential and commercial customers. Star Gas Partners also offers HVAC (heating, ventilation, and air conditioning) services, including equipment installation, maintenance, and repair. The company primarily operates in the Northeast and Mid-Atlantic regions, catering to a large customer base with its extensive network of service centers.

How the Company Makes MoneyStar Gas Partners generates revenue through the sale and distribution of home heating oil and propane to both residential and commercial customers. The company earns money by charging customers for fuel deliveries and offering various payment plans, including fixed-price and price-protection plans, to manage costs effectively. Additionally, Star Gas Partners earns income from its HVAC services, which include equipment sales, installation, and maintenance contracts. The company benefits from strategic partnerships with suppliers and service providers to ensure a steady supply of fuel and optimize operational efficiencies. Seasonal demand, particularly during winter months, significantly influences revenue, with higher sales typically occurring during colder periods.

Star Gas Partners Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q2-2025)

% Change Since: -7.37%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong growth in heating oil and propane volumes, successful acquisitions, and improved profitability, alongside challenges such as increased expenses from the weather hedging program and operating costs. The overall sentiment is positive due to the significant achievements outweighing the challenges.

Q2-2025 Updates

Positive Updates

Significant Increase in Heating Oil and Propane Volume

Home heating oil and propane volume increased by 23% to 144 million gallons in Q2, contributing to a $32 million improvement in adjusted EBITDA.

Successful Acquisition Strategy

Completed $126.5 million in acquisitions since February 1, 2024, enhancing market presence and contributing to increased volume and profitability.

Increased Dividend for Shareholders

Annual dividend was raised by $0.05 to $0.74 per unit, reflecting the company's commitment to maximizing returns for investors.

Improved Service and Installation Business

Service and installation business profitability increased, contributing an additional $1.6 million to adjusted EBITDA in Q2.

Overall Profitability and Growth

Net income for Q2 rose by $18 million to $86 million, driven by higher adjusted EBITDA and increased margins.

Negative Updates

Weather Hedging Program Expenses

Weather hedging program resulted in a $3.1 million expense in Q2, compared to a $6.5 million benefit in the prior year period.

Increased Operating Expenses

Delivery, branch, and G&A expenses increased by $22 million year-over-year, partly due to recent acquisitions and increased base business volume.

Challenges in Consumer Payment Timeliness

Potential concerns about consumer ability to pay for heating oil in the non-heating season due to historical bad debt rates.

Company Guidance

In the Star Group's fiscal 2025 second quarter results conference call, the company provided detailed metrics reflecting significant growth and strategic investments. Home heating oil and propane volumes increased by 23% to 144 million gallons, driven by colder weather and recent acquisitions totaling $126.5 million since February 2024. This resulted in a $32 million improvement in adjusted EBITDA compared to the previous year, reaching $128 million for the quarter. The product gross profit rose by 25% to $258 million, bolstered by higher margins and increased sales volume. Net income for the quarter was $86 million, $18 million higher than the same period last year. Additionally, Star Group raised its annual dividend by $0.05 to $0.74 per unit, reflecting its commitment to maximizing shareholder returns. The company's focus on operational efficiency and expansion in the HVAC sector was emphasized, alongside the implementation of $15 million in weather hedges for fiscal 2026.

Star Gas Partners Financial Statement Overview

Summary

Star Gas Partners demonstrates a solid financial position with improved profitability and operational efficiency. Revenue growth remains modest at 2.1%, but the company has strengthened its balance sheet with a debt-to-equity ratio of 0.85 and improved ROE of 15.8%. Cash flow generation is robust, though the decline in free cash flow growth is a concern. Overall, financial health has improved significantly.

Income Statement

Positive

Star Gas Partners shows a stable gross profit margin of 29.5% TTM, improving from previous margins due to better cost management. The net profit margin increased to 3.3% TTM, up from 1.8% last year, indicating enhanced profitability. Revenue growth was modest at 2.1% TTM compared to the previous period, showing slow but steady expansion. EBIT and EBITDA margins of 6.3% and 8.1% respectively suggest operational efficiency gains. Overall, the income statement reflects improving profitability but moderate revenue growth.

Balance Sheet

Positive

Star Gas Partners maintains a debt-to-equity ratio of 0.85, indicating moderate leverage. Return on Equity (ROE) improved significantly to 15.8% TTM, reflecting better utilization of equity. The equity ratio is at 35.5%, showing a strong equity position relative to assets. Despite improvements, the company had negative equity in past years, indicating historical financial struggles. The current balance sheet reflects improved stability and financial health.

Cash Flow

Positive

The company achieved a free cash flow growth rate of -11.2% TTM, reflecting a decline from previous levels. Operating cash flow to net income ratio is robust at 1.69, indicating strong cash generation relative to net income. The free cash flow to net income ratio is 1.50, demonstrating effective conversion of profits into cash. While cash generation remains strong, the decline in free cash flow growth warrants attention.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
1.80B	1.77B	1.95B	2.01B	1.50B	1.47B
	Gross Profit
531.54M	470.33M	438.40M	451.63M	444.17M	440.40M
	EBIT
113.74M	61.10M	62.55M	43.23M	58.63M	53.38M
	EBITDA
145.92M	92.60M	94.89M	93.05M	163.69M	120.87M
	Net Income Common Stockholders
59.41M	32.10M	29.34M	35.29M	87.74M	55.92M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
18.50M	117.33M	45.19M	14.62M	4.77M	56.91M
	Total Assets
1.06B	939.61M	875.48M	912.48M	853.86M	838.62M
	Total Debt
317.66M	304.56M	243.75M	282.96M	219.09M	227.85M
	Net Debt
299.16M	187.23M	198.56M	268.34M	214.32M	170.94M
	Total Liabilities
688.88M	675.72M	611.75M	654.56M	575.66M	582.80M
	Stockholders Equity
375.92M	269.61M	268.34M	-15.61M	-14.04M	-14.96M
Cash Flow		Free Cash Flow
89.04M	100.33M	114.65M	15.21M	53.79M	161.54M
	Operating Cash Flow
100.20M	110.98M	123.66M	33.91M	68.88M	175.67M
	Investing Cash Flow
-118.38M	-61.19M	-28.20M	-32.63M	-50.33M	-28.14M
	Financing Cash Flow
24.62M	22.35M	-64.89M	8.57M	-70.69M	-95.52M

Star Gas Partners Technical Analysis

Technical Analysis Sentiment

Negative

Last Price11.69

Price Trends

50DMA

12.22

Negative

100DMA

12.47

Negative

200DMA

11.90

Negative

Market Momentum

MACD

-0.17

Positive

RSI

42.36

Neutral

STOCH

36.41

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SGU, the sentiment is Negative. The current price of 11.69 is below the 20-day moving average (MA) of 11.90, below the 50-day MA of 12.22, and below the 200-day MA of 11.90, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 42.36 is Neutral, neither overbought nor oversold. The STOCH value of 36.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SGU.

Star Gas Partners Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SGU	72 Outperform	$404.08M	6.85	16.51%	6.33%	2.38%	114.29%
SUN	68 Neutral	$8.13B	9.57	26.11%	6.75%	-3.59%	22.77%
PARR	66 Neutral	$1.41B	3.02	-4.95%	―	-9.25%	-113.66%
CLNE	61 Neutral	$435.33M	―	-30.25%	―	6.50%	-151.25%
Sector *	58 Neutral	$7.58B	3.29	-4.46%	10.00%	0.84%	-49.61%
CVI	54 Neutral	$2.76B	268.82	-27.14%	16.49%	-16.21%	-130.18%
CAPL	54 Neutral	$819.10M	27.12	666.62%	9.77%	-6.57%	-50.55%

* Energy Sector Average

Performance Comparison

SGU

Star Gas Partners

11.75

1.37

13.20%

CLNE

Clean Energy Fuels

1.90

-0.85

-30.91%

CVI

CVR Energy

27.51

1.19

4.52%

SUN

Sunoco

53.51

0.90

1.71%

CAPL

Crossamerica Partners

21.16

2.52

13.52%

PARR

Par Pacific Holdings

27.87

4.05

17.00%

Star Gas Partners Corporate Events

Private Placements and FinancingBusiness Operations and Strategy

Star Gas Partners Finalizes Unit Purchase Agreement

Neutral

Jun 2, 2025

On May 30, 2025, Star Group, L.P. entered into a Unit Purchase Agreement with Bandera Master Fund, L.P. to acquire 0.7 million common units for approximately $8.4 million in a private transaction, which was finalized on June 2, 2025. This acquisition was conducted outside of Star Group’s unit repurchase plan, indicating a strategic move to consolidate ownership, potentially impacting its market position and stakeholder interests.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.