Ferrellgas Ignites with 9% Revenue Growth: A Buy Ahead of Peak Grilling Demand?

The propane sector has long been a barometer of both economic health and seasonal demand, and Ferrellgas Partners, L.P. (FG) is proving why it's worth watching. Despite headwinds like inflation, litigation-driven losses, and weather volatility, the company delivered a 9% revenue surge in Q3 2025 to $560.8 million, while its Adjusted EBITDA jumped 10% to $114.8 million, marking a clear path to resilience. Let's dissect what's working—and why this stock could be a firecracker ahead of peak grilling season.

The Revenue Engine: A Triumph of Strategy Over Adversity

Ferrellgas' Q3 results are a masterclass in turning challenges into opportunities. While warmer-than-average weather (up 4% vs. historical norms) typically dampens residential propane demand, the company increased residential sales by 12%—a feat achieved through aggressive field operations and new customer contracts. Retail sales rose $32.7 million (9%) due to both volume growth and price hikes at key supply points, which saw propane costs climb 6% and 2.6%, respectively.

The wholesale division also shone, with sales up 8% to $9.9 million, fueled by tank exchange growth (+$3.1 million) and partnerships with national accounts. Ferrellgas secured six major multi-year contracts adding 1.6 million gallons annually, plus four smaller deals, proving its ability to scale beyond its Midwest core into the Southeast and West.

Operational Excellence: The EBITDA Boost

The Adjusted EBITDA leap to $114.8 million wasn't just about top-line growth. Ferrellgas slashed general and administrative costs by $1.1 million and optimized logistics through telematics and cylinder inventory management. Its Blue Rhino division, a key growth lever, invested in production plant upgrades to meet surging grilling demand. This focus on efficiency helped offset a 12% rise in product costs linked to propane pricing—a reminder that cost discipline is key in volatile markets.

Blue Rhino: The Hidden Fuel

Blue Rhino's expansion is a quiet powerhouse. Its storm response efforts during Hurricanes Helene and Milton—providing cylinders to Operation BBQ Relief—built brand loyalty while driving sales. The division's focus on telematics and fleet optimization reduced delivery costs, and its $3.1 million boost in tank exchange revenue highlights smart capital allocation. As summer heats up, Blue Rhino's preparedness for peak demand could be the difference between a good quarter and a great one.

Debt Risks: Don't Let the Litigation Smoke Obscure the Fire

Ferrellgas' Q1 net loss of $146.6 million was a shock, driven by a $125 million accrual for Eddystone litigation. This legal overhang remains a concern, but the company has taken steps to mitigate liquidity risks. Its revolving credit facility maturity was extended to 2025, though the commitment shrank by $41.2 million—a trade-off between flexibility and cost. Investors should monitor litigation progress but not overreact: Ferrellgas' core operations remain strong, and its EBITDA growth is a sign of sustainable financial health.

Why Buy Now?

• Peak Season Momentum: Grilling season (May–September) accounts for 40% of annual propane demand, and Ferrellgas is primed to capitalize. Its Blue Rhino infrastructure upgrades and national account wins position it to outperform.
• Valuation: At current levels, FG trades at just 6.2x forward EBITDA—a discount to peers. If it meets its 2025 guidance, this multiple could expand sharply.
• Weather Proofing: While warmer weather is a risk, Ferrellgas' diversification into industrial, commercial, and agricultural markets reduces reliance on residential demand alone.

The Verdict: Buy with an Eye on Catalysts

Ferrellgas isn't without risks—litigation and propane price swings loom large—but its operational turnaround and strategic bets on Blue Rhino and national accounts make it a compelling play. Investors should consider a gradual build ahead of Q3 earnings, with a price target of $28–30 (up from recent $22 levels) if demand meets expectations.

Final Take: Ferrellgas is firing on all cylinders. For those willing to stomach near-term volatility, this could be a seasonal winner—and a long-term bet on a company that's turning the heat up on growth.

Investing involves risk, including loss of principal. Consult with a financial advisor before making decisions.