The case for & against
Bull & Bear analysis
Bearish
Star Group, L.P. (NASDAQ: SGU) is a leading provider in the residential heating oil and propane markets across the Eastern United States. The company focuses on delivering heating solutions, HVAC installation services, and energy supply logistics to its customer base. Positioned in a market that inherently deals with seasonal and regulatory dynamics, Star Group navigates both operational challenges and opportunities for growth through strategic acquisitions and enhancements to customer offerings, all while dealing with the pressures of fluctuating commodity prices and competition.
Bull says
- ↑6.1% yield backed by $0.1975 quarterly dividend
- ↑Service & installation gross profit up $1.4M YoY to $15.6M
- ↑Completed two acquisitions this fiscal year to expand capacity
- ↑Seasonal demand boosts Q3 revenue to $358M
- ↑High earnings yield and ~0.92 book-to-price imply fair valuation
- ↑Manageable leverage supports further growth investments
Bear says
- ↓Reported $28M Q3 net loss due to volume declines
- ↓Heating oil & propane sales fell 9.4% to 33M gallons
- ↓Delivery & G&A costs rose $25M YoY, squeezing margins
- ↓Analysts cut ratings to hold amid negative earnings revisions
- ↓Insurance claims spiked $6.2M, inflating operating expenses
- ↓Low institutional interest and weak fundamentals raise concern
Earnings Call · Q1 2024 · Mgmt. Guidance
Updated 04-19-2025bearish
Transcript signals
Bull points
- adjusted EBITDA was nearly equivalent to the prior year period.
- We're pleased to see continued improvement in our internal customer satisfaction indicators, most notably, our Net Promoter Score, a well-known metric that measures customer loyalty and specifically the willingness to recommend our brands.
- Our acquisition program continues to be an important part of our growth strategy, and we have been very busy working on a few other attractive opportunities that we feel would be great additions to the organization.
Bear points
- New customer additions were down from the extraordinary levels we experienced in the first quarter of fiscal 2023. This was due in part to the mild weather, but also reflected much different market conditions, resulting in lower lead activity.
- For the quarter, our home heating oil and propane volume decreased by nine million gallons or 10% to approximately 80 million gallons as the additional volume provided from acquisitions was more than offset by the impact of warmer weather, net customer attrition and other factors.
- Our product gross profit fell by $5.6 million or 4% to approximately $145 million as the impact of an increase in per gallon margins was more than offset by the decline in volume sales.
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