Assessing Suburban Propane Partners After Strong Multi Year Gains and DCF Upside in 2025

• If you are wondering whether Suburban Propane Partners still offers good value after its long run, or if the easy money has already been made, this breakdown will help you assess whether the current price makes sense for a long term investor.
• The unit price has eased slightly in the short term, down around 0.6% over the last week and 2.5% over the last month. It is still up 7.2% year to date, 14.0% over the last year, and 54.5% and 85.7% over the past 3 and 5 years respectively.
• That kind of steady multi year climb has come as investors have grown more comfortable with the partnership structure and income profile. At the same time, they have been reassessing the role of propane in a slowly decarbonizing energy mix. Recent commentary around energy infrastructure resilience and demand for reliable off grid fuel has kept interest alive, even when broader utilities have appeared less exciting.
• On our numbers, Suburban Propane Partners scores a solid 5 out of 6 on our valuation checks. This suggests it screens as undervalued on most of the metrics considered. Next, we will walk through those methods in detail, before finishing with a more holistic way of thinking about what this valuation may mean for investors.

Find out why Suburban Propane Partners's 14.0% return over the last year is lagging behind its peers.

Approach 1: Suburban Propane Partners Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms. For Suburban Propane Partners, the model uses a 2 Stage Free Cash Flow to Equity approach, starting with the latest twelve month free cash flow of about $126 million and then applying forecast changes to that figure over time.

Analysts provide detailed estimates for the near term, and beyond that Simply Wall St extrapolates ten year projections based on recent trends. Under these assumptions, Suburban Propane Partners free cash flow is expected to be a little over $115 million in year ten, implying relatively modest long term growth after an initial dip. When all of those projected cash flows are discounted back to today, the model arrives at an intrinsic value of roughly $31.89 per unit, in dollars.

Compared with the current market price, this implies the units are about 40.6% undervalued according to this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Suburban Propane Partners is undervalued by 40.6%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Suburban Propane Partners.

Approach 2: Suburban Propane Partners Price vs Earnings

For a consistently profitable business like Suburban Propane Partners, the price to earnings, or PE, ratio is a practical way to gauge whether investors are paying a reasonable price for each dollar of earnings. In general, companies with stronger growth prospects and lower perceived risk tend to justify higher PE ratios, while slower growth or greater uncertainty usually warrants a lower multiple.

Suburban Propane Partners currently trades on a PE of about 11.8x, which is below both the Gas Utilities industry average of roughly 13.9x and the broader peer group, which sits closer to 16.7x. Simply Wall St also calculates a proprietary “Fair Ratio” for the stock of around 18.3x. This represents the PE that might be expected given its specific earnings growth outlook, industry positioning, profit margins, size and risk profile. This Fair Ratio is more informative than a simple peer or industry comparison because it explicitly adjusts for those company specific factors rather than assuming all utilities should trade on the same multiple.

With the actual PE well below the Fair Ratio, this approach points to Suburban Propane Partners trading at an attractive discount.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1447 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Suburban Propane Partners Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories that express your view of a company and translate it into assumptions about future revenue, earnings, margins and, ultimately, a fair value estimate. A Narrative connects three things: what you think will shape Suburban Propane Partners business, how that flows through to a financial forecast, and what you believe the units are worth versus today’s price. Narratives on Simply Wall St, available to millions of investors through the Community page, make this process accessible by letting you compare the fair value implied by your story to the current unit price to help decide whether to buy, hold or sell. As news, earnings or guidance change, these Narratives can update dynamically so your valuation stays aligned with the latest information. For example, one SPH Narrative might assume renewable projects in Ohio and New York scale smoothly and justify fair value well above today’s price, while a more cautious Narrative could focus on weather risk and leverage to support a fair value closer to the current consensus of around 17 dollars.

Do you think there's more to the story for Suburban Propane Partners? Head over to our Community to see what others are saying!

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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