NJR: Refined Earnings Outlook And Mild Assumption Shifts Will Support Steady Returns

Analysts nudged their price targets for New Jersey Resources higher to $55, reflecting modest adjustments to fair value assumptions, the discount rate, revenue growth, profit margin and future P/E expectations in light of recent research updates.

Analyst Commentary

JPMorgan lifted its price target for New Jersey Resources to $55, which reflects updated views on valuation, earnings power and the appropriate discount rate for the stock.

Bullish Takeaways

Bullish analysts see the higher US$55 target as support for a view that current pricing still leaves some room before the shares fully reflect their fair value estimates.
The revised target incorporates refreshed assumptions for revenue and margin trends, which these analysts view as adequately supporting current earnings expectations and P/E assumptions.
The adjustment signals confidence that recent research inputs, such as updated discount rate work and peer comparisons, justify a slightly richer valuation framework.
Supporters of the new target regard the change as a measured response to new information rather than an aggressive call, which can appeal to investors who prefer incremental shifts in research views.

Bearish Takeaways

Bearish analysts may view the move to US$55 as leaving less cushion if execution around growth plans or cost control were to fall short of expectations embedded in the research work.
The target increase is tied to assumptions on revenue growth and profit margin that some cautious analysts could see as leaving limited room for disappointment.
More conservative voices might argue that relying on updated P/E expectations introduces additional sensitivity to shifts in market sentiment or sector multiples.
For investors focused on downside risk, the higher target can be read as compressing the margin of safety, especially if future revisions to discount rate assumptions turn less favorable.

What's in the News

From October 1, 2025 to December 31, 2025, New Jersey Resources reported no share repurchases under its long running buyback program, with 0 shares repurchased for US$0 million in that period. (Company filing, Buyback Tranche Update)
The company reports that it has completed repurchases totaling 17,814,946 shares, representing 21.63% of shares, for US$303.78 million under the buyback that was announced on December 30, 1996. (Company filing, Buyback Tranche Update)
New Jersey Resources raised its fiscal 2026 net financial earnings per share guidance to a range of US$3.28 to US$3.43, compared with the prior range of US$3.03 to US$3.18, citing strong performance at Energy Services in January 2026. (Company communication, Corporate Guidance)
The company states a fiscal 2025 net financial earnings per share base of US$2.83 and maintains a long term net financial earnings per share growth target of 7% to 9%. It indicates that this would imply a fiscal 2026 net financial earnings per share range of US$3.03 to US$3.08. (Company communication, Corporate Guidance)

Valuation Changes

Fair Value: Target nudged higher from $54.33 to $55.00, reflecting a small upward adjustment in the modeled valuation level.
Discount Rate: Assumption edged down slightly from 7.20% to 7.18%, indicating a modest change in the required return input.
Revenue Growth: Forecast adjusted slightly from 3.09% to 3.04%, keeping expectations in a similar low single digit range.
Net Profit Margin: Margin assumption moved marginally higher from 16.41% to 16.44%, representing a very small refinement in profitability expectations.
Future P/E: Forward P/E input increased modestly from 17.63x to 17.84x, which implies a slightly higher valuation multiple in the model.

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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