A Look at Superior Plus (TSX:SPB) Valuation Following New Share Buyback Authorization

Superior Plus (TSX:SPB) just launched a new share repurchase program, authorizing the buyback of up to 9.67% of its outstanding shares. This move often reflects management’s belief that the stock is undervalued and provides long-term benefits to shareholders.

See our latest analysis for Superior Plus.

Superior Plus has certainly attracted some attention lately, with the share price jumping 13.2% over the past week after announcing the buyback. However, it is still down 10.6% for the month. While the 1-year total shareholder return sits at a strong 19.2%, recent earnings highlighted mixed results, and momentum seems to be building again after a somewhat choppy period.

If you’re curious about what other companies are making bold moves, this is a perfect time to expand your radar and discover fast growing stocks with high insider ownership

With shares still trading below analysts’ targets despite an impressive recent rebound, investors are left to decide whether Superior Plus is truly undervalued or if the market is already factoring in the company’s growth story.

Most Popular Narrative: 26% Undervalued

With Superior Plus closing at CA$7.12, well below the most widely followed narrative’s fair value of CA$9.62, the latest valuation reveals a substantial gap between investor expectations and the current market price. This narrative sets the stage for a deeper look at the company's transformation and bold long-term bets.

Superior Plus is executing a multiyear operational transformation through the Superior Delivers program, focused on delivery and route optimization, advanced analytics for churn and pricing, and cost-to-serve initiatives. These are expected to expand margins and improve EBITDA, particularly in high-demand Q4 and Q1 periods, supporting improved long-term earnings and free cash flow generation.

Read the complete narrative.

Want to know which levers are driving this high target? The numbers behind the narrative rest on aggressive profit growth forecasts and a major boost in efficiency. How can one company justify such optimism? Take a closer look to discover which financial assumptions underpin this bullish outlook.

Result: Fair Value of CA$9.62 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent customer attrition and ongoing decarbonization efforts could both weigh on Superior Plus's long-term earnings outlook and present challenges to current optimism.

Find out about the key risks to this Superior Plus narrative.

Another View: How Does Superior Plus Stack Up on Earnings Multiples?

Looking from an earnings multiple perspective, Superior Plus appears expensive compared to both its global and peer averages. Its price-to-earnings ratio stands at 70.9x, which is far above the global gas utilities average of 14.1x, the peer average of 11.6x, and even the market fair ratio of 31.4x. This large gap adds valuation risk and raises questions about whether recent performance justifies such a premium or if the market is overlooking something critical for the future.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Superior Plus Narrative

If you see things differently or want to dig into the numbers yourself, you can craft your own Superior Plus narrative in just minutes. Do it your way

A great starting point for your Superior Plus research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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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