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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

Negative drivers behind Star Group, L.P.'s recent performance include escalating medical care costs, partly offset by growing membership in all three businesses. The company's high medical care ratios, which increased by 14.1% year-over-year, likely hurt its Q1 earnings. Additionally, the company's premium revenue growth was driven by higher premiums in its government-backed Medicaid insurance plans, but this growth was not enough to offset the rising medical care costs. Furthermore, the company's acquisition push and expansion of service revenues were overshadowed by higher costs and a weather hedge loss.

1.c. Company Highlights

2. Star Group's Q3 Fiscal 2025 Earnings: Weathering the Storm

Star Group's financial performance in Q3 fiscal 2025 was marked by a decline in home heating oil and propane volume, which decreased by 3.8% to 36 million gallons, resulting in a 4% drop in product gross profit to $72 million. The net loss for the quarter was $16.6 million, a $5.6 million increase from the prior year period. The actual EPS came out at -$0.6, slightly worse than the estimated -$0.53. Despite the challenges, the company's service and installation segment posted a $14 million gross profit, a $600,000 increase from the prior year's comparable quarter.

Publication Date: Aug -23

📋 Highlights
  • Q3 Volume Decline:: Home heating oil and propane volume dropped 3.8% (1.5 million gallons) to 36 million gallons due to warmer temperatures and customer attrition.
  • Product Gross Profit Decline:: Fell $3 million (4%) to $72 million in Q3, contrasting with a $14 million service/installation gross profit (up $600,000 YoY).
  • Net Loss Widened:: Q3 net loss reached $16.6 million, a $5.6 million increase compared to the prior year period.
  • YTD Volume Growth:: Home heating oil and propane volume rose 12% (28 million gallons) to 263 million gallons year-to-date.
  • YTD Net Income Surge:: Net income hit $102 million for the first 9 months of fiscal 2025, up $32 million YoY, driven by $480 million in product gross profit (up 13%).

Operational Highlights

The company's volume decline was attributed to slightly warmer temperatures than last year, as well as net customer attrition. However, Jeff Woosnam, during the earnings call, mentioned that the team remains busy with opportunities, having closed on 4 transactions so far this fiscal year. The company's focus on service and installation performance has shown improvement, and adjusted EBITDA from recent acquisitions has positively contributed to the quarter.

Year-to-Date Performance

On a year-to-date basis, Star Group's home heating oil and propane volume increased by 12% to 263 million gallons, resulting in a 13% rise in product gross profit to $480 million. The company posted a net income of $102 million, a $32 million increase from the prior year period. This strong performance is expected to drive the company's fiscal 2025 financial results.

Valuation and Outlook

With the current valuation metrics, Star Group's P/E Ratio stands at 7.34, and the EV/EBITDA ratio is 4.59. The Dividend Yield is 6.2%, indicating a relatively attractive yield for income-seeking investors. Analysts estimate next year's revenue growth at -31.5%, which may be a concern. However, the company's ROIC is 11.46%, and ROE is 16.79%, indicating a decent return on capital and equity. As Jeff Woosnam mentioned during the call, "We believe we are on track for strong financial performance in fiscal 2025." With a Net Debt / EBITDA ratio of 1.84, the company's debt levels appear manageable.

Future Prospects

The company's acquisition pipeline and potential applications for AI in the business are areas to watch. Star Group has instituted some technology into its customer interface, but it remains focused on maintaining a personal touch as a service business. The company's ability to drive growth through acquisitions and technology will be crucial in the coming years.

3. NewsRoom

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Columbia Sportswear Unveils The Endor™ Collection - Inspired by Star Wars: Return of the Jedi™

Dec -03

Source: businesswire.com

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Star Group, L.P. to Host Fiscal 2025 Fourth Quarter Webcast and Conference Call December 9, 2025

Dec -03

Source: globenewswire.com

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Phenom is the Highest-Designated Leader and Star Performer in Everest Group's Candidate Engagement and Experience Platforms PEAK Matrix® Assessment 2025

Dec -01

Source: businesswire.com

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Contrasting Hayward (NYSE:HAYW) and Star Group (NYSE:SGU)

Nov -30

Source: defenseworld.net

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Blue Star Gold Announces Closing of Final Tranche of Non-Brokered Private Placement

Nov -29

Source: newsfilecorp.com

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Boomers Are Flocking to These 3 Utility Stocks for Yields Above 6%

Nov -28

Source: 247wallst.com

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South Star Announces Q3 2025 Financial and Operating Results

Nov -27

Source: globenewswire.com

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Star Equity Holdings to Present at the Noble Capital Markets Emerging Growth Conference on December 3, 2025

Nov -25

Source: globenewswire.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: 7.3/10

Value: 8.4

Growth: 5.8

Quality: 5.2

Yield: 10.0

Momentum: 5.5

Volatility: 9.0

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CrossAmerica Partners

A-Score: 6.3/10

Value: 7.2

Growth: 4.7

Quality: 3.5

Yield: 10.0

Momentum: 3.5

Volatility: 9.0

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World Kinect

A-Score: 5.7/10

Value: 9.6

Growth: 4.7

Quality: 3.7

Yield: 5.0

Momentum: 3.0

Volatility: 8.0

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Delek US Holdings

A-Score: 5.3/10

Value: 8.0

Growth: 2.0

Quality: 3.2

Yield: 6.0

Momentum: 9.5

Volatility: 3.0

1-Year Total Return ->

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Par Pacific

A-Score: 4.4/10

Value: 5.8

Growth: 5.4

Quality: 2.1

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Aemetis

A-Score: 3.4/10

Value: 9.6

Growth: 1.7

Quality: 5.2

Yield: 0.0

Momentum: 3.0

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

11.79$

Current Price

11.79$

Potential

-0.00%

Expected Cash-Flows