Assessing Suburban Propane Partners (SPH) Valuation After First Quarter Earnings Jump
Suburban Propane Partners (SPH) caught investor attention after reporting first quarter 2025 earnings, with net income of US$45.78 million compared to US$19.42 million a year earlier, on relatively stable revenue of about US$370 million.
See our latest analysis for Suburban Propane Partners.
The latest earnings release appears to sit alongside gradually improving sentiment, with a 30 day share price return of 5.52% and a 90 day gain of 8.35%. The 5 year total shareholder return of 96.45% contrasts with a slight 1 year total shareholder return decline of 1.83%, suggesting longer term holders have still seen strong value creation even as near term momentum has been more muted.
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With earnings per unit up sharply while the unit price remains below the analyst price target and intrinsic value estimate, is Suburban Propane Partners still offering value, or is the market already pricing in the stronger profitability?
Most Popular Narrative: 19.1% Overvalued
Suburban Propane Partners units last closed at $20.25, while the most followed narrative anchors fair value at $17.00, using a 7.35% discount rate to assess future cash flows and earnings power.
Expanding renewable natural gas (RNG) capacity through ongoing upgrades and new facilities in Columbus, Ohio and Upstate New York positions the company to access higher growth, lower carbon markets and capitalize on a shift in demand toward cleaner fuels, which is likely to support future revenue and margin growth once projects are operational. Regulatory developments, including amendments to California's LCFS program and anticipated finalization of 45Z PTC tax credit rules, provide potential for higher realized prices and tax credit monetization on renewable fuels, which could positively impact revenues and net margins.
Curious how this cleaner fuels push translates into that fair value? The narrative leans on changing margins, earnings mix and a very specific profit multiple. If you want to see which assumptions really move the valuation, the full story lays out the numbers behind those expectations.
Result: Fair Value of $17 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, the story can change quickly if weather driven propane demand weakens again, or if high leverage and inflation keep squeezing margins and cash flows.
Find out about the key risks to this Suburban Propane Partners narrative.
Another View: Earnings Power Versus Price
The narrative tags Suburban Propane Partners as 19.1% overvalued at $20.25 versus a $17.00 fair value, yet its current 10.1x P/E looks quite different. That multiple sits well below the global gas utilities average of 14.7x, the peer average of 17.4x, and even a 13.3x fair ratio based on historical patterns. So is the market overpaying or underpricing its earnings power?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
All this mixed sentiment only matters if it helps you decide what to do next, so take a close look at the data, weigh both the risks and the upside, and see how 3 key rewards and 3 important warning signs lines up with your own view.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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