25Q2 GAAP diluted EPS was $2.02 and net financial earnings per basic share (NFEPS), a non-GAAP measure, was $1.78. That compares with 24Q2 GAAP EPS of $1.22 and NFEPS of $1.41. I had projected GAAP EPS of $1.58 and NFEPS of $1.59. The improvement in 25Q2’s NFE vs 24Q2 was due primarily to stronger than expected performance in the Energy Services business achieved by capitalizing on natural gas price volatility. Better results in Energy Services more than offset lower than projected profitability in Natural Gas Distribution.
Management raised its fiscal 2025 full year NFEPS guidance by a dime from $3.05-$3.20 per basic share to $3.15-$3.30. At the midpoint, the updated guidance represents a 9.7% increase from fiscal 2024’s $2.94. Even so, this year’s results include the $0.30 gain on the sale of NJR’s Sunlight Advantage business, a one-time item, and much of the Energy Services 25Q2 beat may be difficult to repeat. The $0.10 increase was also less than the $0.19 earnings beat. Consequently, the revised NFEPS guidance indicates that the profitability of the base business will be lower than fiscal 2024. This is also reflected in my estimates for fiscal 2026, which anticipate lower NFEPS vs. 2025.
Updated for 25Q2 results and the revised guidance, my projections now show fiscal 2025 GAAP diluted EPS of $3.53 and NFEPS of $3.25, up from my previous estimates of $3.13 for both GAAP EPS and NFEPS. For fiscal 2026, I forecast GAAP diluted EPS of $3.03 and NFEPS of $3.06, both unchanged from my previous report. 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 and the estimated $0.12 excess 25Q2 Energy Services profits), which is consistent with NJR’s NFEPS growth target of 7%-9%.
Since my last report (on 4/27/25), NJR’s stock has declined 6.9%, underperforming the S&P Mid-Cap 400’s 5.2% gain and the Dow Jones U.S. Gas Utility Index’s 0.5% gain. This occurred despite the quarterly earnings beat and the raised guidance. The stock remains among the cheapest on price-to-earnings in its peer group, trading at 14.0 times projected 2025 NFEPS and 14.9 times projected 2026 NFEPS, below the peer group averages of 16.6 for 2025 and 17.7 for 2026. The low relative valuation persists even though the company has consistently exceeded its beginning of the year NFEPS guidance and its 7%-9% long-term NFEPS growth target (off of baseline results)
There are several factors that help explain NJR’s low relative valuation. First, it is one of only a few gas utility stocks for which consensus estimates anticipate a decline in 2026 earnings. Second, the longer-term prospects for NJR’s unregulated businesses are difficult to predict. (For example, Clean Energy Ventures has lost a steady profit contributor with the sale of its Sunlight Advantage business and now faces the prospect of lower demand for solar in the wake of the Trump administration’s rollback of tax incentives. The profit contribution of Energy Services has also been volatile over time and difficult to forecast.) Finally, the State of New Jersey has recently advanced measures to address rising consumer utility costs. While the measures are aimed at electricity service, the legislature will also require the New Jersey Board of Public Utilities to give greater consideration to affordability in its future rate-making decisions. (Sensitivity to this issue was evident in NJR CEO Steve Westhoven’s opening statement on the 25Q2 conference call.)
As a result of these factors and the stock’s recent underperformance, I am lowering my price target on NJR’s stock from $54 to $49. The new price target equates to 16.0 times projected 2026 NFEPS of $3.06. It represents a potential total return of 11.1%, including the stock’s 3.9% dividend yield. At this time, I am also maintaining my performance rating of “3” (Neutral), even though the potential return is at the very high end of the neutral range.
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 May 24, 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.
This blog post (as with all posts on this website) represents the opinion of Lark Research based upon its own independent research and supporting information obtained from various sources. Although Lark Research believes these sources to be reliable, it has not independently confirmed their accuracy. Consequently, this blog post may contain errors and omissions. Furthermore, this blog post is a summary of a recent report published on this subject and that report provides a more complete discussion and assessment of the risks and opportunities of any investment securities discussed herein. No representation or warranty is expressed or implied by the publication of this blog post. This blog post is for informational purposes only and shall not be construed as investment advice that meets the specific needs of any investor. Investors should, in consultation with their financial advisers, determine the suitability of the post’s recommendations, if any, to their own specific circumstances. Lark Research is not registered as an investment adviser with the Securities and Exchange Commission, pursuant to exemptions provided in the Investment Company Act of 1940. This blog post remains the property of Lark Research and may not be reproduced, copied or similarly disseminated, in whole or in part, without its prior written consent.
You must be logged in to post a comment.