Company Overview
Star Group, L.P. operates within the energy sector, specifically focusing on the oil and gas refining and marketing industry to provide essential heating and fuel solutions. The company's core business involves supplying residential and commercial customers in the United States with home heating oil and propane products, alongside gasoline and diesel fuel. It also extends its service offerings to include the installation, maintenance, and repair of heating and air conditioning equipment, as well as ancillary services. As a significant entity in this domain, the company manages a workforce of 3,024 employees and maintains a market capitalization of $406.71 million. With reported trailing twelve-month revenue of $1.84 billion, Star Group, L.P. demonstrates substantial operational scale that positions it as a major player in the regional fuel distribution landscape. These financial dimensions indicate a robust operational footprint capable of generating significant top-line volume while managing the complexities of a capital-intensive fuel distribution business.
Financial Health
The company recorded revenue of $1.84 billion over the trailing twelve months, with a corresponding net income of $64.79 million and EBITDA of $150.58 million. The substantial gap between the $1.84 billion in revenue and the $64.79 million in net income reveals a cost structure where operating expenses, including the cost of goods sold, depreciation, and administrative costs, consume approximately 95.9% of total revenue before arriving at the bottom line. Despite the lower net income figure, the EBITDA metric highlights a strong earnings power before interest, taxes, depreciation, and amortization, totaling $150.58 million. The company generated free cash flow of $40.29 million, which provides a measure of financial flexibility for managing debt obligations and potentially funding operational improvements or strategic acquisitions. However, the balance sheet shows a leveraged position with total debt of $356.42 million compared to cash holdings of $19.86 million. This disparity is further emphasized by a debt-to-equity ratio of 110.74, indicating that the company relies significantly on borrowed capital relative to its equity base. Liquidity constraints are evident in the current ratio of 0.73, which suggests that current assets are insufficient to cover current liabilities without relying on external financing or asset sales. Regarding return metrics, the company achieved a return on equity of 24.9% and a return on assets of 7.0%. These figures reveal that management is highly effective at utilizing shareholder equity to generate profits, even though the return on assets is moderated by the high level of debt on the balance sheet.
Valuation Assessment
Valuation metrics indicate that the stock trades at a trailing P/E ratio of 6.44 and a forward P/E of 14.06. The difference between these two ratios implies that the market expects earnings to grow significantly in the future to justify the higher forward multiple compared to the current earnings multiple. The price-to-book ratio stands at 1.24, which indicates that the market values the company at a slight premium over its net asset book value. Additionally, the price-to-sales ratio is 0.22, while the EV/EBITDA stands at 4.89, suggesting that the company is valued at a relatively low multiple relative to its sales and earnings before interest, taxes, depreciation, and amortization. In terms of trading range, the stock has a 52-week high of $13.64 and a 52-week low of $11.31. Without the current specific share price provided in the available facts, the exact percentage deviation from the 52-week high cannot be calculated, but the range defines the recent volatility floor and ceiling. The stock exhibits a beta of 0.32, which means the price volatility is significantly lower than the broader market, suggesting the asset moves less than one-third as much as the market index in response to general market movements.
Growth & Income
Star Group, L.P. reported a revenue growth rate of 10.5% year over year and an earnings growth rate of 13.5% year over year. The fact that earnings are growing faster than revenue implies that the company is improving its operational efficiency or benefiting from favorable margin expansion rather than solely relying on increased sales volume to drive profitability. As a company paying dividends, Star Group, L.P. offers a dividend yield of 6.0% with a payout ratio of 37.9%. This payout ratio is highly sustainable given the company's earnings, as it retains more than two-thirds of its earnings for reinvestment or debt reduction while still providing substantial income to shareholders. The combination of double-digit earnings growth and a high dividend yield presents a dual-income profile that rewards investors with capital appreciation potential alongside current income.