Breaking Down Star Group, L.P. (SGU) Financial Health: Key Insights for Investors

You're looking at Star Group, L.P. (SGU) and trying to figure out if the recent financial performance is a blip or a sustainable trend, and honestly, the numbers for fiscal 2025 tell a complex, but defintely actionable, story. The Trailing Twelve Months (TTM) revenue through June 30, 2025, hit a solid $1,777 million, which is a testament to their acquisition strategy and ability to manage pricing volatility. But dig into the operating cash flow, which stands at $95.15 million for the TTM period, and you see the capital intensity of the home energy distribution business, especially with acquisitions driving up interest and depreciation costs.

The good news is that volume is up significantly, with home heating oil and propane sold increasing by 11.8 percent to 262.6 million gallons in the first nine months of fiscal 2025, largely due to colder weather and recent roll-ups. That helped push Net Income from Continuing Operations to $67.08 million TTM, plus they hiked the annual dividend to 74 cents per unit, a clear signal of management's confidence in near-term cash generation. The real question for investors is whether their aggressive acquisition pace-which has been a primary growth driver-can continue to deliver accretive value as the energy landscape shifts. We need to map the risk of warmer-than-normal winters against the opportunity in their expanding service and installation revenue, which acts as a hedge against commodity price swings. Let's break down where the true value lies.

Revenue Analysis

Star Group, L.P. (SGU) is a home energy distributor, so its revenue is highly seasonal and sensitive to weather and commodity prices. The key takeaway for investors is that while the trailing twelve months (TTM) revenue is up, the underlying growth is being driven by volume and acquisitions, not price, which creates a pricing risk.

For the fiscal year 2025, the TTM revenue (as of the third quarter ending June 30, 2025) reached approximately $1.77 billion. This represents a year-over-year revenue growth of 2.95% compared to the fiscal 2024 total revenue of $1.72 billion.

Breakdown of Primary Revenue Sources

Star Group's revenue is fundamentally tied to the home energy market in the United States, primarily providing essential heating and cooling services.

• Product Sales: Distribution of home heating oil and propane, which accounts for the vast majority of top-line revenue.
• Other Petroleum Sales: Sales of gasoline and diesel fuel to commercial customers.
• Services: Installation, maintenance, and repair of heating and air conditioning (HVAC) equipment, which provides a more stable, non-commodity-based revenue stream.

The core of the business remains product volume. For the first nine months of fiscal 2025, the volume of home heating oil and propane sold surged by 11.8%, totaling 262.6 million gallons. This strong volume performance, fueled by colder weather in the second quarter and strategic acquisitions, is what kept the overall revenue number positive.

Near-Term Revenue Trends and Risks

The year-over-year revenue growth rate shows a mixed picture, which is a classic signal of commodity price volatility masking operational gains. While the nine-month year-to-date (YTD) revenue ended June 30, 2025, was approximately $1.5 billion, the growth was modest, less than 1.0 percent over the prior year.

Here's the quick math on the quarterly volatility:

The dip in Q3 is defintely a risk to watch. The decline was primarily due to lower average selling prices for petroleum products, which offset the higher volumes. This shows that while the company is successfully growing its customer base and volume through $126.5 million in acquisitions since February 2024, the top-line revenue is still heavily at the mercy of wholesale product costs.

Segment Contribution and Strategic Shifts

The contribution of different business segments is shifting, which is a positive sign for long-term stability. While the revenue from product sales fluctuates wildly with commodity prices, the service and installation segment provides a necessary buffer. We saw service and installation revenue increase in the first quarter of fiscal 2025, for example.

The focus on expanding its HVAC (Heating, Ventilation, and Air Conditioning) offerings and propane assets is a deliberate strategy to mitigate reliance on the declining home heating oil market. This is critical because the product gross profit for the first nine months of FY2025 was $480 million, a 13% increase, largely due to better per-gallon margins and higher volume, not just higher prices. This indicates strong margin management, even as the company faces customer attrition in its base business. You can review the strategic rationale in detail here: Mission Statement, Vision, & Core Values of Star Group, L.P. (SGU).

Profitability Metrics

You're looking at Star Group, L.P. (SGU) to understand if its core business is generating sustainable profits, and the 2025 fiscal year data shows a mixed but generally improving picture, driven by strategic acquisitions and favorable early-season weather. The key takeaway is that SGU maintains a strong gross margin, which is critical in the volatile home energy distribution space, but its net margin remains thin, reflecting high operating costs and capital expenditures.

For the trailing twelve months (TTM) ending in fiscal 2025, Star Group, L.P. posted a total revenue of $\mathbf{\$1.77 \text{ Billion}}$. This top-line figure translated into a TTM gross profit of $\mathbf{\$561.32 \text{ Million}}$, an operating profit of $\mathbf{\$102.10 \text{ Million}}$, and a net profit of $\mathbf{\$57.32 \text{ Million}}$. Here's the quick math on the TTM margins:

• Gross Profit Margin: $\mathbf{31.59\%}$
• Operating Margin: $\mathbf{5.75\%}$
• Net Profit Margin: $\mathbf{3.74\%}$

A $\mathbf{3.74\%}$ net profit margin is defintely tight, but it's an improvement, and in this low-margin, high-volume industry, every basis point matters.

Profitability Trends and Operational Efficiency

The year-to-date (YTD) results through the third quarter of fiscal 2025 show a clear upward trend in absolute profitability. Star Group, L.P.'s YTD net income reached $\mathbf{\$102 \text{ million}}$, a significant jump from $\mathbf{\$70 \text{ million}}$ in the prior year. This $\mathbf{\$32 \text{ million}}$ increase is a direct result of improved operational efficiency and strategic moves.

The company's YTD product gross profit also rose by $\mathbf{13\%}$ to $\mathbf{\$480 \text{ million}}$. This shows great cost management. They successfully increased their home heating oil and propane volumes by $\mathbf{11.8\%}$ for the first nine months, largely due to colder weather in the core heating season and the added volume from $\mathbf{\$126.5 \text{ million}}$ in recent acquisitions. The increase in volume, coupled with effective per-gallon margin management, helped offset the impact of lower wholesale product costs and the corresponding decline in selling prices.

However, the business is seasonal, and the third quarter of 2025 saw a net loss of $\mathbf{\$16.6 \text{ million}}$, an increase from the prior year's loss, primarily because of unseasonably warmer weather and higher depreciation and interest expenses tied to those acquisitions. What this estimate hides is the inherent volatility of a weather-dependent business, even with hedging contracts in place.

Industry Comparison: SGU vs. Peers

When you compare Star Group, L.P. to its peers in the fuel dealers and propane distribution sector, its profitability metrics are competitive. The industry operates on slim margins, where high fixed costs for distribution infrastructure and volatile commodity prices compress the bottom line. For context, a major competitor, Suburban Propane Partners, L.P., reported a fiscal 2025 net income of $\mathbf{\$106.6 \text{ million}}$ and a total gross margin of $\mathbf{\$868.8 \text{ million}}$.

Star Group, L.P.'s TTM gross margin of $\mathbf{31.59\%}$ is a strong indicator of its pricing power and cost-of-goods management within its regional markets. The real difference-maker is the operating margin, where SGU's $\mathbf{5.75\%}$ TTM figure shows that cost control below the gross profit line is paramount. The table below provides a quick snapshot of the absolute financial health for a clear comparison:

The company's strategy of expanding its HVAC (heating, ventilation, and air conditioning) service offerings is a smart move to diversify revenue and stabilize margins, as service revenue is less exposed to commodity price swings and weather fluctuations. This is a crucial element for long-term margin defense, as discussed in detail in Breaking Down Star Group, L.P. (SGU) Financial Health: Key Insights for Investors.

Next step: Dig into the capital structure and debt load to see how these profits service the balance sheet.

Debt vs. Equity Structure

Star Group, L.P. (SGU) maintains a balanced capital structure, relying on a mix of debt and equity to fund its operations and strategic acquisitions, which is typical for a capital-intensive energy distributor. As of the most recent quarter in fiscal year 2025, the company's financial leverage is manageable, especially when compared to its peers.

The company's total debt is composed of both long-term and short-term obligations, mostly used to manage the highly seasonal nature of the home heating oil and propane business. The total partners' capital (equity) provides a solid base, reflecting the partnership structure.

• Long-Term Debt: Star Group, L.P. reported $177.494 million in long-term debt as of March 31, 2025.
• Short-Term Debt: This includes $21.000 million in current maturities of long-term debt and $22.348 million drawn on its revolving credit facility as of the same date.
• Total Partners' Capital (Equity): The total equity stood at $370.581 million as of March 31, 2025.

Here's the quick math on the key leverage metric:

The Debt-to-Equity (D/E) ratio, which measures a company's financial leverage by comparing total debt to total equity, was 0.85 for Star Group, L.P. in the most recent quarter of fiscal 2025. This is a defintely healthy figure. When you compare this to the industry average for 'Trading Companies & Distributors,' which sits around 0.893, Star Group, L.P. is slightly less leveraged than its typical peer. This indicates a conservative approach to financing, relying more on partners' capital than debt, which is a positive sign for stability in a cyclical business like home energy distribution.

Balancing Debt and Equity for Growth

Star Group, L.P. primarily uses debt financing for two core purposes: managing working capital needs during the peak heating season and funding strategic growth through acquisitions. The company's seasonal business model means it needs short-term capital to cover inventory and receivables before the cash flows from winter sales arrive; this is where the revolving credit facility comes in. The $22.348 million in borrowings on the revolver as of Q2 2025 is a direct reflection of this seasonal working capital requirement.

For long-term growth, the company has been active, completing $126.5 million in acquisitions since February 2024. This aggressive acquisition strategy, which expands its geographic footprint and customer base, is a major use of both debt and equity. The fact that the company still maintains a strong interest coverage ratio of 7.29x shows its earnings are more than sufficient to cover its interest payments, even with the new debt taken on for these deals. This balance-using debt for accretive (earnings-boosting) acquisitions while keeping the overall leverage ratio below the industry average-is a prudent financial strategy.

To learn more about the complete financial picture, you can check out the full analysis in Breaking Down Star Group, L.P. (SGU) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Star Group, L.P. (SGU) has the cash to cover its near-term obligations, especially given the cyclical nature of the home heating oil business. The short answer is: their liquidity ratios look thin on paper, but this is a structural reality for the industry, not defintely a crisis.

As of the most recent quarter, Star Group's liquidity positions-the Current Ratio and Quick Ratio-are well below the standard 1.0 benchmark, which immediately signals a working capital deficit (where current liabilities exceed current assets). The Current Ratio sits at 0.70, meaning for every dollar of short-term debt, they only have 70 cents in short-term assets to cover it. The more stringent Quick Ratio (excluding inventory, which can be slow to turn) is even lower at 0.47.

Here's the quick math on what that means for their working capital trends: the sub-1.0 Current Ratio is a persistent feature of this business. Star Group's working capital is often negative because they collect cash from customers quickly, but they pay their suppliers on a slower cycle, plus they rely heavily on short-term credit facilities to manage the high inventory costs of heating oil before the winter season hits. It's a classic asset-light model in the retail energy space, but it means they must have reliable access to credit. Their balance sheet is manageable, but the cyclical earnings and persistent inflation pose risks to real returns.

• Current Ratio: 0.70 (Short-term assets cover only 70% of short-term debt).
• Quick Ratio: 0.47 (Less than half of short-term debt covered by the most liquid assets).
• The low ratios are common for distributors in the pre-winter inventory build-up phase.

Looking at the cash flow statements (CFS) for the Trailing Twelve Months (TTM) ending around Q3 2025, you get a clearer picture of how they manage this tight liquidity.

Their Operating Cash Flow (CFO) is strong at $95.15 million (TTM). This shows the core business of selling home heating oil and services is generating healthy cash. But, the Investing Cash Flow (CFI) is a significant outflow of -$129.49 million (TTM). This negative number is driven by their aggressive strategy of growth through acquisition, which is a key part of their business model, with four acquisitions completed this fiscal year.

This gap between CFO and CFI, a deficit of over $34 million in the TTM, means they must rely on Financing Cash Flow (CFF) to bridge the difference, plus cover the quarterly distribution of 18.50 cents per unit declared in October 2025. This is where the potential liquidity concerns lie: the M&A-driven growth requires external funding, either through debt or equity, and that increases their long-term solvency risk (their debt/equity ratio is 0.85). Still, the distribution remains well-covered by earnings.

The key takeaway is that Star Group, L.P. (SGU) is intentionally operating with a low working capital cushion to maximize efficiency, but this requires continuous, reliable access to their credit facilities. The strength is the consistent operating cash flow; the risk is that a sudden, severe market or credit shock could expose their tight liquidity position. For a deeper look at the long-term debt structure, check out Breaking Down Star Group, L.P. (SGU) Financial Health: Key Insights for Investors.

Valuation Analysis

You want to know if Star Group, L.P. (SGU) is a value trap or a genuine opportunity, and the quick answer is that its valuation metrics suggest it is undervalued relative to the broader market, but the price action shows a near-term dip. This is a classic 'value vs. momentum' tension.

As a seasoned analyst, I look at three core ratios to map out a company's financial health and potential value-Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA). Here's the quick math on Star Group, L.P. (SGU) using its late fiscal 2025 data:

• Price-to-Earnings (P/E): The trailing twelve months (TTM) P/E ratio sits at about 7.19. Honestly, that's quite low for the current market environment, which often sees averages in the high teens or twenties. It suggests you are paying only about seven dollars for every dollar of the company's annual earnings.
• Price-to-Book (P/B): The P/B ratio is a modest 1.18. This means the stock price is just slightly above the net asset value of the company, which is defintely a sign of a potential value play.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio, which is great for capital-intensive businesses like Star Group, L.P. (SGU), is around 4.77 (TTM). Anything under 10 is often considered healthy, and this sub-5 number points to a very attractive valuation based on operating cash flow before debt and taxes.

The stock price trend over the last 12 months, however, tells a slightly different story. The stock has been range-bound, trading between its 52-week low of $11.11 and its high of $13.75, and overall, the price has decreased by about -2.24% over the past year. This negative price movement is why the valuation metrics look so cheap-the market is pricing in either slow growth or perceived risk, which you need to understand by reading the Mission Statement, Vision, & Core Values of Star Group, L.P. (SGU).

Dividend Strength and Analyst View

For income-focused investors, Star Group, L.P. (SGU) offers a compelling dividend profile. The company has an annual dividend of $0.74 per share, which translates to a strong trailing dividend yield of approximately 6.28% as of late 2025. That's a significant income stream.

The dividend payout ratio is key for sustainability. Based on trailing earnings, the ratio is about 56.06%, which is a healthy, sustainable level. It means the company is only paying out about half of its earnings as dividends, leaving plenty of room for reinvestment or a cushion in leaner times. Plus, they have a history of increasing the dividend for 13 consecutive years.

Finally, the analyst consensus leans positive. The average recommendation from the five analysts tracking Star Group, L.P. (SGU) is a 'Buy' rating, with the breakdown showing a clear majority: 3 Buy, 1 Strong Buy, and 1 Hold. This consensus suggests that Wall Street sees the current low valuation as a temporary dip and expects the price to appreciate.

Risk Factors

You're looking at Star Group, L.P. (SGU), a company whose core business is tied to the weather, and that simple fact creates the biggest near-term risk. While the company posted a strong year-to-date performance through Q3 2025, largely due to colder temperatures in the winter months, its financial health remains highly sensitive to unpredictable climate patterns and long-term regulatory headwinds.

The most immediate operational risk is the weather. For example, in the third quarter of fiscal 2025 alone, warmer-than-usual temperatures contributed to a 7.8 percent decrease in total revenue to $305.6 million, and drove the net loss up to $16.6 million. That's a direct hit to the bottom line. Plus, the business faces constant pressure from net customer attrition, as homeowners in the Northeast and Mid-Atlantic regions continue to convert to natural gas or electric heating systems.

Here's a quick snapshot of the core risks you need to watch:

• Weather Volatility: The single largest factor. Colder winters boost volume (up 11.8 percent to 262.6 million gallons in the first nine months of fiscal 2025), but mild seasons immediately reverse this gain.
• Commodity Price Swings: Geopolitical events and supply chain issues can spike wholesale costs for heating oil and propane, squeezing per-gallon margins.
• Regulatory Headwinds: Long-term threat from climate policies pushing for electrification and natural gas adoption, which directly erode demand for SGU's core product.
• Acquisition Integration: SGU is aggressively growing through acquisitions, completing four this fiscal year and spending $126.5 million since February 2024. Integrating those new businesses and realizing expected synergies is a constant operational challenge.

To be fair, Star Group, L.P. is not just sitting around waiting for a blizzard. They are actively mitigating these risks. The company uses weather hedge contracts to help smooth out the revenue impact of volatile temperatures, though these hedges can result in an expense, like the $3.1 million expense recorded in Q2 2025 due to colder-than-expected temperatures.

Strategically, they are shifting to become a more diversified energy provider. This means expanding the service and installation business, particularly in HVAC (Heating, Ventilation, and Air Conditioning), which is less weather-dependent and contributed to increased gross profit year-to-date. They are also investing in technology, like AI, to enhance customer service, which is a key differentiator in a highly fragmented, competitive industry. This focus on service and diversification is their long-term play to become more resilient and adaptable to varied weather conditions.

The financial risk is manageable, but you have to keep an eye on their debt load, especially as they fund their acquisition strategy. Their trailing 12-month earnings per share (EPS) of $1.66 provides a healthy payout ratio for their $0.74 forward annual distribution, but that EPS is near a 10-year high and is highly dependent on favorable weather. If you want to dig deeper into who is buying and why, you should check out Exploring Star Group, L.P. (SGU) Investor Profile: Who's Buying and Why?

The table below summarizes the financial impact of the weather risk in fiscal 2025:

The bottom line is that SGU is a cyclical business, defintely. They are using acquisitions and service expansion to fight the long-term decline in heating oil demand, but near-term results will always be a coin toss based on the winter forecast.

Growth Opportunities

Star Group, L.P. (SGU) is defintely not a high-growth tech stock, but its near-term opportunity lies in consolidating a fragmented market and growing its higher-margin service business. The core strategy is simple: buy smaller competitors and sell more services to your existing 405,000+ customer base across the Northeast and Mid-Atlantic.

The company's primary growth engine is its steady, accretive acquisition strategy, which is a smart play in the highly fragmented home energy distribution sector. For instance, since February 2024, Star Group completed $126.5 million in acquisitions, including a single, sizable purchase of a home energy distributor for approximately $68 million in January 2025.

• Acquisitions: Buy small, established regional players for immediate customer and volume growth.
• Service Expansion: Push higher-margin HVAC and plumbing services to existing fuel customers.
• Propane Focus: Strategic acquisitions are bolstering the more resilient propane operations.

Near-Term Revenue and Earnings Estimates

The company's financial performance for the first nine months of fiscal year 2025 shows the impact of this strategy, plus the benefit of colder weather compared to the prior year. Here's the quick math: acquisitions and colder temperatures drove home heating oil and propane volume up by 11.8% to 262.6 million gallons through the first nine months of the fiscal year.

This volume growth, combined with improved per-gallon margins, pushed the year-to-date Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization-a key measure of operating cash flow) to $169.5 million, a $28.2 million increase over the same period in fiscal 2024. What this estimate hides is the significant weather sensitivity; a warm winter can still quickly erode these gains, as seen in the Q3 2025 net loss of $16.6 million.

For a full-year context, the trailing twelve months (TTM) revenue is sitting at about $1.78 billion, with TTM Earnings Per Share (EPS) at $1.66. The full fiscal 2025 results will be released in December, but the nine-month actuals give you a solid picture of the momentum heading into the final, non-core quarter.

Strategic Initiatives and Competitive Edge

The biggest strategic initiative is the push to become a more diversified energy provider, which helps mitigate the inherent weather risk. Management is actively working to improve the service and installation business, which contributed $4.8 million more to gross profit year-to-date, with $2.1 million coming from base business initiatives alone. That's a smart move to stabilize revenue during warmer periods.

Star Group's competitive advantage comes from its sheer size and economies of scale as the largest retail distributor of home heating oil in the U.S. This dominance gives it better purchasing power and allows it to be selective when acquiring smaller, often family-owned, rivals at favorable valuations. To understand the company's long-term vision, you should review its Mission Statement, Vision, & Core Values of Star Group, L.P. (SGU).

Still, the company's future growth is not without risk. The long-term trend of customers converting to natural gas, plus the increasing focus on climate change and renewable energy sources, means Star Group must continually acquire new customers just to offset net customer attrition. That means the acquisition pipeline needs to stay full for the growth story to continue.