Star Gas Partners (SGU) AI Stock Analysis

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Star Gas Partners

(NYSE:SGU)

Rating:64Neutral

Price Target:

$13.00

▲(7.44%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)

Market Cap

$418.25M

Dividend Yield5.78%

Average Volume (3M)29.38K

Price to Earnings (P/E)7.1

Beta (1Y)0.32

Revenue Growth2.38%

EPS Growth114.29%

CountryUS

Employees3,039

SectorEnergy

Sector Strength45

IndustryOil & Gas Refining & Marketing

Share Statistics

EPS (TTM)2.01

Shares Outstanding34,565,975

10 Day Avg. Volume33,874

30 Day Avg. Volume29,375

Financial Highlights & Ratios

PEG Ratio<0.01

Price to Book (P/B)1.37

Price to Sales (P/S)0.00

P/FCF Ratio4.41

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

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 Group, L.P. sells home heating and air conditioning products and services to residential and commercial home heating oil and propane customers in the United States. It also sells diesel fuel, gasoline, and home heating oil on a delivery only basis, as well as provide plumbing services; and installs maintains, and repairs heating and air conditioning equipment. As of September 30, 2021, the company served approximately 422,200 full service residential and commercial home heating oil and propane customers and 71,100 customers on a delivery only basis. It also sells gasoline and diesel fuel to approximately 26,700 customers. Kestrel Heat, LLC operates as the general partner of the company. The company was formerly known as Star Gas Partners, L.P. and changed its name to Star Group, L.P. in October 2017. Star Group, L.P. was incorporated in 1995 and is based in Stamford, Connecticut.

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 Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q2-2025)

% Change Since: -4.12%|

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 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

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

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

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.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
1.73B	1.77B	1.95B	2.01B	1.50B	1.47B
	Gross Profit
492.19M	470.33M	438.40M	451.63M	444.17M	440.40M
	EBIT
88.51M	61.10M	62.55M	43.23M	58.63M	53.38M
	EBITDA
119.82M	92.60M	94.89M	93.05M	163.69M	120.87M
	Net Income Common Stockholders
51.34M	31.79M	29.06M	35.29M	87.74M	55.92M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
48.79M	117.33M	45.19M	14.62M	4.77M	56.91M
	Total Assets
986.75M	939.61M	875.48M	912.48M	853.86M	838.62M
	Total Debt
299.54M	304.56M	243.75M	282.96M	219.09M	227.85M
	Net Debt
250.75M	187.22M	198.56M	268.34M	214.32M	170.94M
	Total Liabilities
695.71M	675.72M	611.75M	654.56M	575.66M	582.80M
	Stockholders Equity
306.89M	280.17M	268.34M	-15.61M	-14.04M	-14.96M
Cash Flow		Free Cash Flow
95.24M	100.33M	114.65M	15.21M	53.79M	161.54M
	Operating Cash Flow
106.72M	110.98M	123.66M	33.91M	68.88M	175.67M
	Investing Cash Flow
-59.96M	-61.19M	-28.20M	-32.63M	-50.33M	-28.14M
	Financing Cash Flow
-17.89M	22.35M	-64.89M	8.57M	-70.69M	-95.52M

Star Gas Partners Technical Analysis

Technical Analysis Sentiment

Negative

Last Price12.10

Price Trends

50DMA

12.62

Negative

100DMA

12.36

Negative

200DMA

11.82

Positive

Market Momentum

MACD

-0.08

Positive

RSI

41.29

Neutral

STOCH

10.64

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 12.1 is below the 20-day moving average (MA) of 12.34, below the 50-day MA of 12.62, and above the 200-day MA of 11.82, indicating a neutral trend. The MACD of -0.08 indicates Positive momentum. The RSI at 41.29 is Neutral, neither overbought nor oversold. The STOCH value of 10.64 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
SUN	75 Outperform	$8.43B	9.92	26.11%	6.37%	-3.59%	22.77%
SGU	64 Neutral	$418.25M	7.09	16.51%	5.78%	2.38%	114.29%
PARR	63 Neutral	$1.16B	3.02	-4.95%	―	-9.25%	-113.66%
CLNE	60 Neutral	$404.40M	―	-30.25%	―	6.50%	-151.25%
Sector *	57 Neutral	$7.06B	3.04	-3.49%	5.80%	0.53%	-50.39%
CAPL	54 Neutral	$867.48M	28.72	666.62%	9.31%	-6.57%	-50.55%
CVI	46 Neutral	$2.36B	268.82	-27.14%	8.51%	-16.21%	-130.18%

* Energy Sector Average

Performance Comparison

SGU

Star Gas Partners

12.10

1.85

18.05%

CLNE

Clean Energy Fuels

1.83

-0.87

-32.22%

CVI

CVR Energy

23.86

-3.94

-14.17%

SUN

Sunoco

56.16

8.97

19.01%

CAPL

Crossamerica Partners

22.77

4.85

27.06%

PARR

Par Pacific Holdings

22.47

-4.22

-15.81%

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.