Ferrellgas is a compelling post-bankruptcy turnaround story with significant, underappreciated upside potential.
The company's complex capital structure, particularly the expensive preferred stock, is a key hurdle that, once addressed, will unlock substantial equity value.
Long-term growth will be driven by consolidating the fragmented propane market through strategic M&A, targeting $50-$100 million in EBITDA acquisitions.
Near-term catalysts, including a NASDAQ relisting and the reinstatement of a dividend, will lead to a stock re-rating and a price target of $40-$50 within 12-18 months.
Despite a slowly declining core market, Ferrellgas's dominant Blue Rhino brand and high customer switching costs provide a stable cash flow base to fund deleveraging and growth.
Pre-2020
As described by Paryse, Ferrellgas undertook a disastrous, highly-levered acquisition of oil storage businesses, which set the stage for its financial distress.
2020
Paryse states that Ferrellgas filed for bankruptcy.
2021
Paryse notes that the company emerged from an unusual bankruptcy where existing equity holders retained their shares, with founder Jim Farrell returning to lead the company.
Post-2021
According to Paryse, a board member appointed by PGM, the largest holdco debt owner during the bankruptcy, began purchasing stock after the company emerged.
Podcast Time
Paryse analyzes the recent conversion of 1.3 million Class B units into 6.5 million Class A units, resulting in PGM becoming an estimated 50% owner of the company.
Future
Paryse presents his forward-looking analysis, predicting a NASDAQ relisting, dividend reinstatement, and a significant M&A push over the next 1-3 years.
▶Post-Bankruptcy Turnaround and Financial RecoveryMay 2026
Paryse frames Ferrellgas as a company that has successfully navigated a 2020-2021 bankruptcy caused by a disastrous acquisition. He highlights its current stable financial footing, with annual EBITDA between $330-$340 million and projected free cash flow of $85-$90 million, as the foundation for its recovery.
Paryse's thesis is built on the idea that the market has not yet fully appreciated the company's operational stability and improved financial health following its complex but successful reorganization.
▶Complex Capital Structure and Deleveraging PathMay 2026
A central theme is the intricate capital structure, comprising high-yield bonds and a $700 million preferred stock instrument that must be redeemed at a 12.25% IRR. Paryse explains how this structure, along with a 7.0x leverage covenant, dictates the company's financial strategy, focusing on cash accumulation before shareholder returns.
For investors, understanding the mechanics and redemption cost of the preferred stock is critical, as Paryse presents it as the primary obstacle that must be cleared to unlock significant value for common equity holders.
▶Growth Through Industry ConsolidationMay 2026
Paryse argues that Ferrellgas's long-term value creation will come from M&A in the fragmented propane industry. He posits this strategy is necessary to generate growth, as he believes the core residential heating market is in a state of slow decline, and speculates the company aims to acquire $50-$100 million of EBITDA in the next three years.
This M&A narrative provides a forward-looking growth story that counteracts the stagnant nature of the underlying market, suggesting the company's future is more dependent on capital allocation skill than organic growth.
▶Event-Driven Catalysts for Stock Re-rating
Paryse outlines a series of specific, upcoming events that he predicts will drive the stock price higher. These include a potential relisting on the NASDAQ by summer 2024, the reinstatement of a dividend around March 2025, and the financial clarification following the recent conversion of Class B units.
This highlights that Paryse's investment thesis is not just based on fundamentals but is also highly dependent on specific corporate actions occurring within his predicted timeframes to attract a wider investor base and close a perceived valuation gap.