NJR: Differentiated Gas And Midstream Model Will Support Strong Future Cash Flows

Analysts have modestly raised their price target on New Jersey Resources, lifting fair value by about $1 to roughly $55 per share. They cite confidence in the company’s differentiated mix of core gas utility, regulated midstream assets, and disciplined capital funding that supports solid FFO-to-debt metrics despite slightly lower projected profit margins.

Analyst Commentary

Recent research updates point to a generally constructive view on New Jersey Resources, with modest upside embedded in higher price targets and continued confidence in the company’s operating model.

Bullish Takeaways

Bullish analysts highlight New Jersey Resources’ differentiated portfolio, noting that the combination of its core New Jersey Natural Gas utility, regulated midstream assets, and select unregulated businesses supports a premium valuation versus more traditional gas utilities.
The company’s peer leading 18% to 20% FFO to debt ratio is seen as evidence of a high quality financial model, reinforcing conviction that leverage remains manageable even as the capital spending plan advances.
Consistent execution on capex funding without material equity dilution is viewed as a key driver of long term total returns, supporting confidence that earnings growth can translate more directly into per share value creation.
Steady operational performance across business lines, despite ongoing scrutiny of the mix, is cited as a reason to expect the stock to re rate higher as the market gains comfort with the strategy and visibility into cash flow growth.

Bearish Takeaways

Bearish analysts remain cautious about the complexity of the business mix, arguing that exposure to unregulated operations introduces additional execution and regulatory risk that may cap valuation relative to pure play regulated peers.
There are concerns that maintaining an elevated FFO to debt target could become more challenging if interest rates stay higher for longer, potentially pressuring free cash flow and limiting future balance sheet flexibility.
Some see the recent price target increase as incremental rather than transformational, suggesting that much of the near term upside may already be reflected in the shares, given modest expectations for margin expansion.
Uncertainty around longer term gas demand trajectories and policy trends in New Jersey is viewed as a structural overhang that could restrain multiple expansion even if near term execution remains solid.

What's in the News

Maintained long term net financial earnings per share (NFEPS) growth target of 7% to 9%, reaffirming confidence in multi year earnings visibility (company guidance).
Introduced fiscal 2026 NFEPS guidance range of $3.03 to $3.18, based on a fiscal 2025 NFEPS starting point of $2.83 per share (company guidance).
Signaled continued focus on executing the capital plan and funding strategy needed to support the targeted earnings trajectory through 2026 (company guidance).

Valuation Changes

Fair Value has risen slightly, increasing by about $1 from roughly $53.57 to $54.71 per share.
Discount Rate has inched higher, moving from about 6.93% to 6.96%, implying a marginally higher required return.
Revenue Growth assumptions have increased substantially, from roughly 0.11% to about 3.09%, indicating a more optimistic top line outlook.
Net Profit Margin expectations have declined modestly, easing from about 18.98% to roughly 17.46%.
Future P/E has risen moderately, moving from approximately 16.7x to 17.5x, suggesting a slightly higher valuation multiple on forward earnings.

Growth is supported by population trends, commercial development, and expanded clean energy and infrastructure investments, driving stable recurring revenues and earnings visibility.
Strategic focus on energy efficiency, renewables, and infrastructure modernization positions the company to benefit from decarbonization trends and sustained dividend growth.
Heavy dependence on traditional natural gas operations and regulatory outcomes leaves future growth and margins vulnerable to policy changes, market uncertainty, and evolving energy trends.

Catalysts

About New Jersey Resources

An energy services holding company, distributes natural gas.What are the underlying business or industry changes driving this perspective?

The company is positioned to benefit from robust population growth and new commercial development in its core New Jersey service territories, supporting reliable customer growth and recurring revenues for its utility operations.
Expanding investments in energy efficiency through the SAVEGREEN program-benefiting from accelerated cost recovery-are poised to align with increasing state and federal decarbonization efforts, improving both near-term net margins and positioning NJR for long-term earnings growth.
A multi-year pipeline of solar and clean energy projects at Clean Energy Ventures, supported by flexible, risk-adjusted capital deployment, offers upside to future revenues and margin diversification as demand for renewable infrastructure accelerates.
Ongoing modernization and expansion initiatives in storage and transportation (such as potential Leaf River expansion and Adelphia rate case resolution) provide rate base and organic growth opportunities that enhance stable, fee-based cash flows and improve long-term earnings visibility.
The company's strong balance sheet, ample liquidity, and history of disciplined capital allocation underpin management's capacity to fund growth initiatives and consistently grow dividends, supporting resilient shareholder value and net margin stability.

New Jersey Resources Earnings and Revenue Growth

New Jersey Resources Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming New Jersey Resources's revenue will decrease by 0.1% annually over the next 3 years.
Analysts assume that profit margins will shrink from 19.6% today to 19.0% in 3 years time.
Analysts expect earnings to reach $399.3 million (and earnings per share of $3.92) by about September 2028, down from $411.7 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.7x on those 2028 earnings, up from 11.4x today. This future PE is lower than the current PE for the US Gas Utilities industry at 17.6x.
Analysts expect the number of shares outstanding to grow by 0.68% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.93%, as per the Simply Wall St company report.

New Jersey Resources Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

A significant majority of CapEx and long-term earnings growth remain tied to natural gas infrastructure and traditional utility business, exposing NJR to risks from accelerating electrification and decarbonization policies that could reduce natural gas demand and thus pressure long-term revenue growth and margins.
While SAVEGREEN and energy efficiency initiatives receive positive regulatory support now, future regulatory decisions or shifts in policy focus could limit approval or reduce rate recovery, potentially leading to lower earnings growth and a tougher return-on-equity environment.
The company's ability to realize expected returns from large investments in solar (CEV) and storage/transportation assets is dependent on uncertain market pricing, project execution and evolving federal and regional energy policy, increasing the risk of underperformance or write-downs-impacting future net margins and asset valuations.
Heightened capital expenditure requirements, particularly in the context of pipeline upgrades, network expansions, and new commercial/reliability projects, may not all receive timely regulatory approval or cost recovery, squeezing free cash flow and compressing net margins amid higher debt loads.
Ongoing reliance on population and commercial growth in core New Jersey territories to drive base load growth could be challenged by macroeconomic slowdowns, housing market shifts, or slower-than-expected demographic growth trends, resulting in stagnating organic revenue and earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

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.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.1 billion, earnings will come to $399.3 million, and it would be trading on a PE ratio of 16.7x, assuming you use a discount rate of 6.9%.
Given the current share price of $46.52, the analyst price target of $53.57 is 13.2% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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