As of June 17, 2025, Star Group LP's estimated intrinsic value ranges from $11.79 to $34.45 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $27.04 | +131.7% |
| Discounted Cash Flow (5Y) | $23.94 | +105.2% |
| Dividend Discount Model (Multi-Stage) | $11.79 | +1.0% |
| Dividend Discount Model (Stable) | $23.95 | +105.2% |
| Earnings Power Value | $34.45 | +195.2% |
Is Star Group LP (SGU) undervalued or overvalued?
With the current market price at $11.67, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Star Group LP's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.64 | 0.84 |
| Cost of equity | 6.8% | 9.6% |
| Cost of debt | 4.9% | 8.9% |
| Tax rate | 27.6% | 27.9% |
| Debt/Equity ratio | 0.52 | 0.52 |
| After-tax WACC | 5.7% | 8.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $24 | $1,030M | 74.8% |
| 10-Year Growth | $27 | $1,137M | 55.9% |
| 5-Year EBITDA | $14 | $675M | 61.6% |
| 10-Year EBITDA | $19 | $842M | 40.5% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $95M |
| Discount Rate (WACC) | 8.5% - 5.7% |
| Enterprise Value | $1,118M - $1,668M |
| Net Debt | $202M |
| Equity Value | $916M - $1,466M |
| Outstanding Shares | 35M |
| Fair Value | $27 - $42 |
| Selected Fair Value | $34.45 |
| Metric | Value |
|---|---|
| Market Capitalization | $403M |
| Enterprise Value | $606M |
| Trailing P/E | 5.55 |
| Forward P/E | 11.19 |
| Trailing EV/EBITDA | 5.45 |
| Current Dividend Yield | 634.00% |
| Dividend Growth Rate (5Y) | 0.54% |
| Debt-to-Equity Ratio | 0.52 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $8.11 |
| Discounted Cash Flow (5Y) | 25% | $5.99 |
| Dividend Discount Model (Multi-Stage) | 20% | $2.36 |
| Dividend Discount Model (Stable) | 15% | $3.59 |
| Earnings Power Value | 10% | $3.44 |
| Weighted Average | 100% | $23.49 |
Based on our comprehensive valuation analysis, Star Group LP's weighted average intrinsic value is $23.49, which is approximately 101.3% above the current market price of $11.67.
Key investment considerations:
Given these factors, we believe Star Group LP is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.