Suburban Propane (SPH) AI Stock Analysis

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Suburban Propane

(NYSE:SPH)

Rating:63Neutral

Price Target:―

Suburban Propane's overall stock score of 63 reflects a stable financial position with strong cash flow generation and decent profitability. The company's strategic initiatives in the propane sector and partnerships like the one with NASCAR are promising. However, high leverage, declining revenue trends, and technical indicators pointing to a bearish trend weigh on the score. The stock's valuation is reasonable, supported by a high dividend yield, but challenges in the renewable natural gas segment and increased expenses present risks.

Positive Factors

Acquisitions

SPH should also benefit from ~$65mn of acquisitions made before the heating season, including its largest single acquisition ($53mn) in New Mexico / Arizona since the Inergy deal in 2012.

Index Rebalancing

SPH benefited significantly from the recent Alerian index rebalancing, showing a 20% increase compared to a 10% increase for the broader AMZ index.

Weather Impact

Colder temperatures since the start of 2025 are expected to improve results for the second quarter.

Negative Factors

Financial Performance

SPH reported F4Q24 adj EBITDA results of $1mn that missed MSUSA ($5mn) and Street ($9mn) estimates.

Leverage and Valuation

The company maintains an Underweight rating due to valuation concerns, elevated leverage, and ongoing capital requirements for RNG projects.

Weather Sensitivity

The volatility is a reminder of the inherent weather sensitivity of the propane distribution industry.

Suburban Propane (SPH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.24B

Dividend Yield6.78%

Average Volume (3M)128.08K

Price to Earnings (P/E)13.3

Beta (1Y)0.43

Revenue Growth4.02%

EPS Growth-14.66%

CountryUS

Employees3,098

SectorUtilities

Sector Strength87

IndustryRegulated Gas

Share Statistics

EPS (TTM)2.10

Shares Outstanding64,959,366

10 Day Avg. Volume129,512

30 Day Avg. Volume128,084

Financial Highlights & Ratios

PEG Ratio-4.40

Price to Book (P/B)2.42

Price to Sales (P/S)0.00

P/FCF Ratio12.01

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$19.50

Price Target Upside1.77% Upside

Rating ConsensusHold

Number of Analyst Covering2

Suburban Propane Business Overview & Revenue Model

Company DescriptionSuburban Propane Partners, L.P. (SPH) is a publicly traded master limited partnership engaged primarily in the distribution of propane, fuel oil, and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. Established in 1928, the company operates through a network of more than 700 locations in 41 states, providing reliable energy solutions to residential, commercial, industrial, and agricultural customers. Suburban Propane is committed to delivering exceptional customer service and dependable energy solutions to meet the diverse needs of its clients.

How the Company Makes MoneySuburban Propane generates revenue primarily through the sale and distribution of propane, fuel oil, and refined fuels. A significant portion of its revenue comes from long-term customer relationships, including residential, commercial, and industrial clients. The company also offers equipment installation and maintenance services, which contribute to its revenue streams. In addition to direct sales, Suburban Propane leverages its extensive distribution network and strategic partnerships to optimize supply chain efficiencies and expand market reach. The company's ability to adapt to market dynamics, along with its focus on operational excellence, helps it maintain stable earnings and profitability.

Suburban Propane Financial Statement Overview

Summary

Suburban Propane exhibits a stable financial position with strong operational cash flows and decent profitability margins. However, the company faces challenges with high leverage and a declining revenue trend. While operational efficiency is a positive sign, addressing revenue growth is crucial for improving its financial outlook.

Income Statement

Positive

The income statement shows a mixed performance. The TTM gross profit margin is approximately 4.35%, which is relatively low. The TTM net profit margin is around 7.19%, indicating moderate profitability. Revenue has shown a declining trend over the years, but the company managed to improve its EBIT and EBITDA margins in the TTM period to 18.27% and 22.25%, respectively, suggesting a focus on cost control and operational efficiency.

Balance Sheet

Neutral

The balance sheet reflects a challenging position with a high debt-to-equity ratio calculated at approximately 0.25, indicating significant leverage. The equity ratio stands at roughly 22.85%, reflecting a moderate level of equity financing. The return on equity (ROE) for the TTM is about 12.68%, indicating decent returns for shareholders despite the high leverage.

Cash Flow

Positive

Cash flow analysis reveals a solid performance with a strong operating cash flow to net income ratio of 2.63 for the TTM, indicating efficient cash generation from operations. The free cash flow to net income ratio is 1.59, highlighting effective capital expenditure management. However, free cash flow growth has been volatile, which could pose risks to future cash availability.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
1.33B	1.33B	1.43B	1.50B	1.29B	1.11B
	Gross Profit
415.20M	328.12M	361.00M	789.34M	803.28M	724.95M
	EBIT
175.70M	171.25M	206.85M	206.33M	213.24M	140.27M
	EBITDA
213.88M	216.47M	260.39M	259.64M	296.59M	252.13M
	Net Income Common Stockholders
69.14M	74.17M	123.75M	139.71M	122.79M	60.76M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.44M	3.22M	3.51M	4.10M	5.81M	3.14M
	Total Assets
2.38B	2.27B	2.27B	2.10B	2.05B	2.05B
	Total Debt
1.44B	1.35B	1.33B	1.21B	1.25B	1.33B
	Net Debt
1.44B	1.35B	1.33B	1.21B	1.24B	1.33B
	Total Liabilities
1.84B	1.73B	1.72B	1.61B	1.63B	1.68B
	Stockholders Equity
545.14M	547.06M	546.36M	-12.60M	-17.58M	-25.78M
Cash Flow		Free Cash Flow
110.02M	101.16M	180.29M	176.19M	196.70M	176.86M
	Operating Cash Flow
182.14M	160.59M	225.24M	220.55M	226.55M	209.35M
	Investing Cash Flow
-142.25M	-81.64M	-170.64M	-94.44M	-34.08M	-53.24M
	Financing Cash Flow
-35.47M	-72.50M	-44.63M	-127.82M	-189.81M	-155.41M

Suburban Propane Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price19.16

Price Trends

50DMA

19.94

Negative

100DMA

19.83

Negative

200DMA

18.61

Positive

Market Momentum

MACD

-0.23

Positive

RSI

46.80

Neutral

STOCH

38.54

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPH, the sentiment is Neutral. The current price of 19.16 is below the 20-day moving average (MA) of 19.44, below the 50-day MA of 19.94, and above the 200-day MA of 18.61, indicating a neutral trend. The MACD of -0.23 indicates Positive momentum. The RSI at 46.80 is Neutral, neither overbought nor oversold. The STOCH value of 38.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SPH.

Suburban Propane Risk Analysis

Suburban Propane disclosed 51 risk factors in its most recent earnings report. Suburban Propane reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Suburban Propane Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
POR	77 Outperform	$4.60B	14.70	8.33%	4.76%	11.83%	9.53%
NWN	71 Outperform	$1.64B	16.18	7.36%	4.80%	3.88%	11.80%
Sector *	64 Neutral	$8.54B	10.24	4.67%	4.36%	4.12%	-13.19%
SPH	63 Neutral	$1.24B	13.29	14.42%	6.78%	4.02%	-14.66%
UTL	63 Neutral	$876.41M	18.39	9.07%	3.20%	-5.57%	-2.26%
YORW	58 Neutral	$469.88M	23.86	8.63%	2.63%	3.45%	-19.90%

* Utilities Sector Average

Performance Comparison

SPH

Suburban Propane

19.16

1.01

5.56%

NWN

Northwest Gas

40.76

6.76

19.88%

POR

Portland GE

42.00

0.52

1.25%

YORW

The York Water Company

32.90

-2.49

-7.04%

UTL

Unitil

54.41

5.19

10.54%

Suburban Propane Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q2-2025)

% Change Since: -4.49%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong performance in the propane segment with significant volume increases and financial improvements, supported by strategic acquisitions and partnerships. However, challenges in the renewable natural gas segment and increased operating expenses posed some concerns.

Q2-2025 Updates

Positive Updates

Increase in Propane Volumes

Propane volumes for the quarter increased 15.5% compared to the prior year second quarter, marking the highest propane volume since 2018 during January 2025.

Adjusted EBITDA Growth

Adjusted EBITDA for the quarter increased by $28 million or 19.1% compared to the prior year second quarter.

Successful Propane Acquisition

The integration of a propane business acquired in New Mexico and Arizona exceeded expectations, marking the largest single propane acquisition since 2012.

Improved Financial Metrics

Consolidated leverage ratio improved to 4.54 times from 4.99 times at the end of the first quarter, and distribution coverage remained strong at 2.17 times.

Launch of ATM Equity Sales Program

Launched an ATM equity sales program, raising $8.8 million in net proceeds, which were used to repay outstanding debt under the revolver.

Partnership with NASCAR

Suburban Propane became the official propane partner of NASCAR, providing propane for new track dryers and other services at NASCAR events.

Negative Updates

Challenges in Renewable Natural Gas Segment

RNG production faced headwinds from cold temperatures impacting production and lower prices for California LCFS credits and D3 RIN prices.

Regulatory Ambiguity on Production Tax Credits

Ambiguity in US Treasury Department's proposed regulations on production tax credits affected RNG production and sales at the Stanfield facility.

Increased Operating Expenses

Combined operating and G&A expenses increased by $14.9 million or 9.7% compared to the prior year's second quarter, primarily due to higher payroll and benefit-related expenses.

Higher Net Interest Expense

Net interest expense increased by 3.3% due to higher average outstanding borrowings under the revolving credit facility.

Company Guidance

During the Suburban Propane Partners Second Quarter Earnings Conference Call for fiscal 2025, the company reported a 15.5% increase in propane volumes compared to the prior year's quarter, resulting in a $28 million or 19.1% increase in adjusted EBITDA. The company achieved a net income of $136.9 million or $2.11 per common unit, compared to $110.3 million or $1.71 per common unit in the prior year. Retail propane gallons sold in the quarter were 162 million gallons, and average temperatures were 5% warmer than normal and 9% cooler than the prior year's second quarter. The company raised $8.8 million through its ATM equity sales program, which was utilized to repay debt. Additionally, the company is advancing capital projects in Columbus, Ohio, and Upstate New York, and integrating a recent $53 million propane business acquisition. The company also discussed its renewable natural gas (RNG) operations, facing some challenges with lower California LCFS credits and D3 RIN prices, while continuing to enhance RNG production and efficiency at its Stanfield facility. The official propane partnership with NASCAR was highlighted as a strategic sponsorship to enhance brand visibility and align with sustainability initiatives.

Suburban Propane Corporate Events

Dividends

Suburban Propane Announces Quarterly Distribution for Q2

Neutral

Apr 24, 2025

On April 24, 2025, Suburban Propane Partners, L.P. announced a quarterly distribution of $0.325 per Common Unit for the fiscal second quarter ending March 29, 2025, equating to an annualized rate of $1.30 per Common Unit. The distribution, payable on May 13, 2025, to unitholders of record as of May 6, 2025, highlights the company’s ongoing financial commitments and has implications for foreign investors due to federal income tax withholding requirements.

Financial Disclosures

Suburban Propane Announces Q2 Results Conference Call

Neutral

Apr 23, 2025

On April 23, 2025, Suburban Propane Partners, L.P. announced it will hold its Fiscal 2025 Second Quarter Results Conference Call on May 8, 2025. This event will provide analysts, investors, and interested parties an opportunity to hear management discuss the company’s financial results and business outlook, potentially impacting stakeholders’ perspectives on Suburban Propane’s market positioning and future performance.

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.