A Look At New Jersey Resources (NJR) Valuation After Raised Earnings Guidance And Quarterly Beat

New Jersey Resources (NJR) is back in focus after reporting quarterly results that topped analyst forecasts on both revenue and earnings per share, while management lifted full-year net financial EPS guidance to a range of 7% to 9% growth.

See our latest analysis for New Jersey Resources.

The latest earnings beat and higher guidance have arrived alongside a 12.6% 30 day share price return and a 17.8% year to date share price return. The 1 year total shareholder return of 21.8% suggests positive momentum has been building rather than fading.

If you are reassessing utilities after this update, it could be a good time to see what else is moving in energy infrastructure and related plays via our screener of 24 power grid technology and infrastructure stocks.

With shares near a 52 week high, earnings guidance pointing to 7% to 9% growth, and the stock trading only about 2% below one analyst target, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 0.3% Undervalued

New Jersey Resources last closed at $54.16, almost in line with the most followed fair value estimate of about $54.33, which anchors much of the current narrative around the stock.

The analysts have a consensus price target of $53.571 for New Jersey Resources based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $61.0, and the most bearish reporting a price target of just $49.0.

Read the complete narrative.

Curious what holds this fair value near the current share price, even as growth expectations are restrained and margins are gently recalibrated? The core of this narrative rests on measured revenue assumptions, an adjusted profit profile and a future earnings multiple that still leans on confidence in the business mix rather than aggressive expansion. Want to see exactly how those ingredients combine to support that $54.33 figure instead of something much lower or higher?

Result: Fair Value of $54.33 (ABOUT RIGHT)

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

However, the story can change quickly if regulatory support for gas and renewables shifts or if large solar and infrastructure bets fail to earn expected returns.

Find out about the key risks to this New Jersey Resources narrative.

Another Angle On Value

There is also our DCF model, which puts the value of New Jersey Resources at about $15.82 per share, well below the current $54.16 price. That indicates a very different perspective, with the current market price sitting far above the future cash flow estimate. This raises an important question: which signal should investors rely on more?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out New Jersey Resources for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 56 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Feeling like the picture here is mixed rather than clear cut? Take a look at the full risk and reward breakdown and decide for yourself with 2 key rewards and 2 important warning signs.

Looking for more investment ideas?

If this update has sharpened your focus, do not stop here. Use the tools available to compare opportunities and pressure test your next move.

• Target stronger value by reviewing our shortlist of 56 high quality undervalued stocks that pair quality fundamentals with more modest pricing.
• Prioritise resilience by scanning 80 resilient stocks with low risk scores that score well on stability and downside protection.
• Hunt for potential future standouts by checking our screener containing 24 high quality undiscovered gems that many investors may not be watching yet.

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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