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Star Gas Partners LP (SGU)
NYSE:SGU
US Market

Star Gas Partners (SGU) AI Stock Analysis

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SG

Star Gas Partners

(NYSE:SGU)

Rating:64Neutral
Price Target:
$13.00
▲( 7.00% Upside)
Star Gas Partners demonstrates stable financial performance with strong cash flow and profitability. The company's undervaluation and high dividend yield are positive factors, but technical indicators suggest caution due to bearish trends. The earnings call reveals growth and strategic investments, although increased costs and potential payment challenges present risks. Overall, the stock is moderately attractive, primarily supported by valuation and financial stability.

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

Star Gas Partners Business Overview & Revenue Model

Company DescriptionStar Gas Partners, L.P. is a leading distributor of home heating products and services in the United States. Operating primarily in the northeastern and midwestern regions, the company provides heating oil, propane, and related services to residential and commercial customers. In addition to fuel delivery, Star Gas offers comprehensive HVAC services including equipment installation, maintenance, and repair, positioning itself as a full-service energy provider.
How the Company Makes MoneyStar Gas Partners generates revenue through the sale and delivery of heating oil and propane to its customer base, which includes both residential and commercial clients. The company also earns income by providing HVAC services such as installation, maintenance, and repair of heating and cooling systems. A significant portion of its revenue comes from long-term service contracts and loyalty programs which ensure a steady stream of income. Additionally, Star Gas benefits from economies of scale and strategic acquisitions that expand its market share and enhance its operational efficiency.

Star Gas Partners Financial Statement Overview

Summary
Star Gas Partners exhibits stable financial performance with decent profit margins and operational efficiency. The balance sheet is moderately leveraged with a good return on equity, though historical issues with negative equity should be monitored. Cash flows are strong, supporting operational needs and potential future growth.
Income Statement
65
Positive
The company has shown stable gross and net profit margins in the TTM period with a gross profit margin of 48.12% and a net profit margin of 3.29%. However, the revenue growth is negative when compared to the previous annual period, indicating a decline in sales. The EBIT and EBITDA margins are also moderate at 5.13% and 6.56%, respectively, suggesting some operational efficiency but room for improvement.
Balance Sheet
55
Neutral
The balance sheet shows a debt-to-equity ratio of 0.98, which indicates a balanced approach to leveraging, though the equity ratio of 31.11% suggests that the company has a moderate equity base relative to its assets. The return on equity is strong at 18.48%, but it is important to note past instances of negative equity which can pose risks.
Cash Flow
70
Positive
The cash flow statement reflects a healthy operating cash flow to net income ratio of 1.88, indicating that the company is generating strong cash flows relative to its reported earnings. Additionally, the free cash flow growth rate is slightly negative compared to the previous period, but the free cash flow to net income ratio of 1.68 shows good cash conversion efficiency.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
1.73B1.77B1.95B2.01B1.50B1.47B
Gross Profit
492.19M470.33M438.40M451.63M444.17M440.40M
EBIT
88.51M61.10M62.55M43.23M58.63M53.38M
EBITDA
119.82M92.60M94.89M93.05M163.69M120.87M
Net Income Common Stockholders
51.34M31.79M29.06M35.29M87.74M55.92M
Balance SheetCash, Cash Equivalents and Short-Term Investments
48.79M117.33M45.19M14.62M4.77M56.91M
Total Assets
986.75M939.61M875.48M912.48M853.86M838.62M
Total Debt
299.54M304.56M243.75M282.96M219.09M227.85M
Net Debt
250.75M187.22M198.56M268.34M214.32M170.94M
Total Liabilities
695.71M675.72M611.75M654.56M575.66M582.80M
Stockholders Equity
306.89M280.17M268.34M-15.61M-14.04M-14.96M
Cash FlowFree Cash Flow
95.24M100.33M114.65M15.21M53.79M161.54M
Operating Cash Flow
106.72M110.98M123.66M33.91M68.88M175.67M
Investing Cash Flow
-59.96M-61.19M-28.20M-32.63M-50.33M-28.14M
Financing Cash Flow
-17.89M22.35M-64.89M8.57M-70.69M-95.52M

Star Gas Partners Technical Analysis

Technical Analysis Sentiment
Negative
Last Price12.15
Price Trends
50DMA
12.64
Negative
100DMA
12.35
Negative
200DMA
11.81
Positive
Market Momentum
MACD
-0.06
Negative
RSI
42.41
Neutral
STOCH
18.98
Positive
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 12.15 is below the 20-day moving average (MA) of 12.36, below the 50-day MA of 12.64, and above the 200-day MA of 11.81, indicating a neutral trend. The MACD of -0.06 indicates Negative momentum. The RSI at 42.41 is Neutral, neither overbought nor oversold. The STOCH value of 18.98 is Positive, 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 (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
SUSUN
75
Outperform
$8.43B9.9226.11%6.37%-3.59%22.77%
SGSGU
64
Neutral
$419.98M7.1216.51%5.78%2.38%114.29%
63
Neutral
$1.13B3.02-4.95%-9.25%-113.66%
60
Neutral
$413.24M-30.25%6.50%-151.25%
57
Neutral
$7.06B3.04-3.49%5.80%0.53%-50.39%
54
Neutral
$859.48M28.46666.62%9.31%-6.57%-50.55%
CVCVI
46
Neutral
$2.36B268.82-27.14%8.51%-16.21%-130.18%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SGU
Star Gas Partners
12.15
2.22
22.36%
CLNE
Clean Energy Fuels
1.87
-0.87
-31.75%
CVI
CVR Energy
23.50
-5.59
-19.22%
SUN
Sunoco
55.19
7.99
16.93%
CAPL
Crossamerica Partners
22.56
4.55
25.26%
PARR
Par Pacific Holdings
21.90
-5.28
-19.43%

Star Gas Partners Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q2-2025)
|
% Change Since: -3.72%|
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 Corporate Events

Executive/Board Changes
Star Gas Partners Board Member Announces Retirement
Neutral
Jan 17, 2025

Henry D. Babcock, a long-serving member of the Board of Directors and Audit Committee of Kestrel Heat, LLC, the general partner of Star Group, L.P., announced his retirement effective January 15, 2025. His departure is not due to any disagreement with the company. Following his retirement, the board will reduce its size from eight to seven members.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.