Suburban Propane shares target raised by Argus on secure dividend By Investing.com

On Monday, Argus raised the 12-month price target for Suburban Propane (NYSE:) Partners L.P. (NYSE: SPH) shares to $25, up from $24, while reiterating a Buy rating on the stock.

The firm highlighted the company’s attractive dividend yield of approximately 6.3%, which is considered secure. Suburban Propane’s recent performance has been affected by warmer weather conditions, but Argus anticipates modest growth for the company in the fiscal years 2024 and 2025.

The company has been actively refining its portfolio as part of the broader transition to renewable energy. This strategic shift comes at a time when Suburban Propane’s stock has been showing a bullish trend, with higher highs and higher lows noted since September 2023.

The firm’s analysis suggests that the stock is currently trading at 9 times its fiscal year 2025 earnings per unit estimate, which is below the historical average range of 6 to 15 times.

Argus further pointed out that compared to its historical performance, Suburban Propane is trading at a discount on most valuation metrics. This assessment comes with the observation that the stock has maintained a generally positive technical trend in recent months.

The firm’s decision to increase the price target reflects a confidence in the company’s potential for growth and the perceived undervaluation of the stock in the market. Suburban Propane’s focus on maintaining a strong dividend yield and adjusting its business model to align with energy transition trends are key factors supporting this outlook.

InvestingPro Insights

Suburban Propane Partners L.P. (NYSE: SPH) has garnered attention with its significant dividend yield and a trading pattern that suggests a bullish outlook. According to InvestingPro data, the company has a market capitalization of $1.33 billion and is trading at a P/E ratio of 12.33, reflecting a valuation that is attractive relative to near-term earnings growth. Notably, the company has maintained dividend payments for 29 consecutive years, with the latest dividend yield standing at a robust 6.24%. Analysts predict that Suburban Propane will remain profitable this year, despite a projected sales decline.

InvestingPro Tips indicate that Suburban Propane is trading at a low earnings multiple and pays a substantial dividend to shareholders, which aligns with Argus’s positive stance on the company’s dividend yield. Additionally, with a six-month price total return of 27.5% and a year-to-date price total return of 21.25%, the company has shown a large price uptick, reinforcing the bullish trend noted by Argus. For those seeking to delve deeper into Suburban Propane’s financials and future prospects, InvestingPro offers additional tips and metrics, which can be accessed at https://www.investing.com/pro/SPH. Subscribers can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further insights into this evolving energy company.

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