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In March 2019, New Jersey Resources Corporation (NYSE:NJR) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, as a 47% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 4.2%. Presently, with latest-twelve-month earnings at US$233m, we should see this growing to US$343m by 2020. Below is a brief commentary on the longer term outlook the market has for New Jersey Resources. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Check out our latest analysis for New Jersey Resources
How will New Jersey Resources perform in the near future?
Over the next three years, it seems the consensus view of the 7 analysts covering NJR is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of NJR’s earnings growth over these next few years.
From the current net income level of US$233m and the final forecast of US$409m by 2022, the annual rate of growth for NJR’s earnings is 14%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $2.43 in the final year of forecast compared to the current $2.66 EPS today. With a current profit margin of 8.0%, this movement will result in a margin of 14% by 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For New Jersey Resources, I’ve compiled three fundamental factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for New Jersey Resources’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of New Jersey Resources? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.