25Q1 GAAP diluted EPS was $1.31 and net financial earnings per basic share (NFEPS), a non-GAAP measure, was $1.29. That compares with 24Q1 GAAP EPS of $0.91 and NFEPS of $0.74. I had projected GAAP EPS of $1.19 and NFEPS of $1.18. The improvement in 25Q1’s NFE vs 24Q1 was due to a $54.9 million gain recorded on the $132.5 million sale of NJR’s Sunlight Advantage, its 91 megawatt (MW) residential solar portfolio. NJR also benefited from new higher base rates at its New Jersey Natural Gas (NJNG) utility.
Management was pleased with the performance across all business segments. Excluding the gain on sale, net financial earnings (NFE) increased 2%. Higher earnings from NJNG and the Storage & Transportation businesses were mostly offset by an implicit decline at Clean Energy Ventures, excluding the residential solar portfolio sale, some of which was probably due to the loss of revenues and earnings from the sale. Energy Services’ NFE was flat.
NJR has confirmed its fiscal 2025 NFE guidance of $3.05-$3.20 per basic share, up from $2.95 in fiscal 2024. That guidance includes an estimated $0.30 benefit from the recently completed sale of Sunlight Advantage. It also reaffirmed its long-term NFEPS growth target of 7%-9%.
Updated for 25Q1 results, my projections anticipate fiscal 2025 GAAP diluted EPS of $3.13, unchanged from my previous report, and NFEPS of $3.13, up from $3.10. My projections are in line with management’s guidance. For fiscal 2026, I forecast GAAP diluted EPS of $3.03 (down $0.05 from my previous report) and NFE per basic share of $3.06 (unchanged). The cash flow items in my 2026 forecast – CFOA, capital expenditures, dividend and stock and debt issuance – are consistent with guidance. Despite the decline from 2025 to 2026, my projections represent an 8% increase from the implied NFEPS fiscal 2025 base of $2.83 (excluding the $0.30 gain from Sunlight Advantage), which is consistent with NJR’s NFEPS percentage growth target of 7%-9%.
Since my last report (on 12/2/24), NJR’s stock has declined 3.7%, which is better than the S&P Mid-Cap 400’s 15.7% decline, but worse than the Dow Jones U.S. Gas Utility Index’s 5.0% gain. All of the underperformance vs. peers occurred from December until mid-February, as the stock gave back its earlier gains vs. peers. Since then, its performance has been in line with peers. The stock suffered a 10% drop in early April, along with the broader market, but it has recovered those losses and has traded between $49 and $50 for the past eight trading sessions, even though the broader market has moved higher during that time. Gas utility stocks have been viewed by investors as defensive and therefore have been a safe haven during this bout of market volatility.
Since my earnings forecast is little changed, I have decided to maintain my price target for NJR’s stock at $54 for now, at least until the company reports earnings on May 6. The price target equates to 17.5 times projected fiscal 2026 NFEPS of $3.06. That assumed valuation multiple is above the one-year forward price-to-NFEPS multiple of 15.7 times for NJR’s stock, and closer to the average of 17.8 for NJR’s peer group. So the price target implies that NJR’s valuation discount vs. peers will be nearly eliminated over the next 6-12 months. Closing such a wide gap so quickly looks aggressive under current circumstances, but I am reluctant to lower the price target ahead of earnings just one week away. In my view, narrowing the valuation gap will require, among other things, greater clarity around the outlook for NJR’s Clean Energy Ventures business to support management’s positive view. Although the $54 price target represents a potential total return of 13.6% from NJR’s current share price of $49.13, including its 3.7% dividend yield, I am maintaining my rating of “3” (Neutral) for now.
This is a summary of Lark Research’s recent report on New Jersey Resources Corp. (NJR). To obtain a copy of the report, please reach out to Steve Percoco using the contact information provided below.
June 20, 2025 (Report published on April 27, 2025.)
Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com
© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
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