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1. Company Snapshot

1.a. Company Description

Star 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.

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1.b. Last Insights on SGU

Star Group, L.P.'s recent performance was positively driven by improved Q4 results, driven by stronger volumes, margins, and acquisitions. The company's quarterly distribution of $0.1850 per common unit for Q4 2025 reflects stability. With a focus on home energy distribution and services, Star Group's strategic acquisitions have enhanced its position. Institutional ownership stands at 40.4%, indicating investor confidence. Although Bandera Partners LLC reduced its stake by 20.3%, the company's growth prospects remain intact.

1.c. Company Highlights

2. Star Group's Fiscal 2026 First Quarter Results: A Strong Start

Star Group's financial performance in the first quarter of Fiscal 2026 was robust, driven by a combination of recent acquisitions, effective physical supply and per gallon margin management, and colder temperatures. The company's adjusted EBITDA increased by $16.5 million or 32% year-over-year to $68 million, despite a $5 million charge to the weather hedge program. Product gross profit rose by $29 million or 19% to approximately $179 million. Net income increased by $3 million to $36 million. However, the actual EPS came out at '-0.6', slightly missing estimates at '-0.53'.

Publication Date: Feb -14

📋 Highlights
  • Adjusted EBITDA Growth:: Surged 32% YoY to $68 million, driven by acquisitions, margin management, and colder weather.
  • Volume Increase:: Home heating oil and propane sales rose 14% to 94 million gallons due to acquisitions and cold temperatures.
  • Product Gross Profit:: Jumped $29 million (19%) to $179 million, bolstered by stronger margins and volume.
  • Weather Impact:: Operating regions experienced 19% colder temperatures YoY and 6% below normal, boosting demand.
  • Net Income Growth:: Increased by $3 million to $36 million despite $5 million weather hedge charge and $11 million higher expenses.

Operational Highlights

The company's home heating oil and propane volume rose by 14% to approximately 94 million gallons, driven by additional volume from acquisitions and colder temperatures. Temperatures in the company's geographic areas were 19% colder than the previous year and 6% colder than normal. The cold weather has continued into the second quarter, with January finishing 2% colder than last year and 9% colder than normal. As Jeff Woosnam, President and Chief Executive Officer, noted, the company is well-prepared to address challenges and opportunities over the remainder of the heating season.

Valuation and Growth Prospects

With a P/E Ratio of 6.28 and an EV/EBITDA of 4.63, the company's valuation appears reasonable. Analysts estimate next year's revenue growth at 13.5%, indicating a positive outlook for the company's future performance. The company's focus on customer service, cost management, and growing service and installation profitability is expected to drive growth. The Dividend Yield of 5.76% also makes the stock attractive to income-seeking investors.

Expense Management and Future Plans

Delivery, branch, and G&A expenses rose by $11 million, which is a notable increase. However, the company remains focused on cost management. The company completed a small heating oil business acquisition and has several opportunities under review, indicating a continued focus on growth through strategic acquisitions.

3. NewsRoom

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Shark Tank's Kevin O'Leary, “Mr. Wonderful,” Brings Star Power to Myseum's Flagship Picture Party Platform

Feb -19

Source: globenewswire.com

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Hilton Los Cabos Reaffirms Four-Star Rating in Forbes Travel Guide 2026 Star Awards

Feb -18

Source: globenewswire.com

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Blue Star Expands Highly Prospective Auma Property to 11,794 Hectares

Feb -18

Source: newsfilecorp.com

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Star Holdings Reports Fourth Quarter and Fiscal Year 2025 Results

Feb -17

Source: prnewswire.com

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Star Copper Announces $5,000,000 Flow-Through Share Financing to Fund Aggressive 2026 Drill Program; Phase 2 (2025) Drill Results Pending

Feb -17

Source: accessnewswire.com

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Western Star Resources Increases Non-Brokered Private Placement for Aggregate Proceeds of CAD $3,000,000

Feb -17

Source: thenewswire.com

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Liberty All-Star® Equity Fund January 2026 Monthly Update

Feb -14

Source: businesswire.com

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Northern Star Resources: A Quality Gold Miner Trading At Conservative Prices

Feb -13

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.65%)

6. Segments

Petroleum Products

Expected Growth: 3.5%

Growing demand for transportation fuels, increasing industrial activities, and rising energy consumption are expected to drive the growth of petroleum products from Star Group, L.P. Additionally, the company's diversified supplier base and extensive distribution network are likely to support its market position.

Installations and Services

Expected Growth: 4.5%

Growing demand for energy-efficient HVAC systems, increasing adoption of smart home technologies, and rising need for reliable heating oil delivery services drive growth in the Installations and Services segment.

7. Detailed Products

Heating Oil

Star Group, L.P. provides heating oil to residential and commercial customers, offering a reliable and efficient source of heat during the cold winter months.

Propane

Star Group, L.P. offers propane as a clean-burning and efficient fuel source for various applications, including cooking, heating, and powering appliances.

Diesel Fuel

Star Group, L.P. supplies diesel fuel to commercial and industrial customers, supporting the transportation and logistics industries.

Natural Gas

Star Group, L.P. provides natural gas to residential and commercial customers, offering a clean and efficient source of energy for heating, cooking, and powering appliances.

Electricity

Star Group, L.P. offers electricity to residential and commercial customers, providing a reliable and efficient source of power for lighting, heating, and cooling.

Price Protection Programs

Star Group, L.P. offers price protection programs to help customers manage their energy costs, providing budget certainty and protection against market volatility.

Energy Efficiency Solutions

Star Group, L.P. provides energy efficiency solutions to help customers reduce their energy consumption and lower their energy bills.

8. Star Group, L.P.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Star Group, L.P. is medium due to the availability of alternative energy sources and the increasing adoption of renewable energy.

Bargaining Power Of Customers

The bargaining power of customers for Star Group, L.P. is low due to the company's strong brand reputation and the lack of switching options for customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Star Group, L.P. is medium due to the company's dependence on a few key suppliers and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants for Star Group, L.P. is high due to the low barriers to entry and the increasing demand for energy services.

Intensity Of Rivalry

The intensity of rivalry for Star Group, L.P. is high due to the competitive nature of the energy industry and the presence of several established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 46.55%
Debt Cost 6.03%
Equity Weight 53.45%
Equity Cost 6.03%
WACC 6.03%
Leverage 87.09%

11. Quality Control: Star Group, L.P. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Star

A-Score: 7.2/10

Value: 8.5

Growth: 5.7

Quality: 5.3

Yield: 10.0

Momentum: 4.5

Volatility: 9.0

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CrossAmerica Partners

A-Score: 6.5/10

Value: 6.5

Growth: 4.6

Quality: 3.7

Yield: 10.0

Momentum: 5.5

Volatility: 9.0

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World Kinect

A-Score: 5.7/10

Value: 9.8

Growth: 4.7

Quality: 3.7

Yield: 5.0

Momentum: 3.5

Volatility: 7.7

1-Year Total Return ->

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Par Pacific

A-Score: 5.7/10

Value: 8.8

Growth: 5.4

Quality: 6.4

Yield: 0.0

Momentum: 10.0

Volatility: 3.3

1-Year Total Return ->

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Delek US Holdings

A-Score: 5.6/10

Value: 7.9

Growth: 2.0

Quality: 4.3

Yield: 6.0

Momentum: 10.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Aemetis

A-Score: 2.7/10

Value: 8.7

Growth: 1.6

Quality: 4.1

Yield: 0.0

Momentum: 1.0

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

13.05$

Current Price

13.05$

Potential

-0.00%

Expected Cash-Flows