A Fresh Look at New Jersey Resources (NJR) Valuation After Another Dividend Increase and 30 Years of Steady Growth

Thinking about what to do with New Jersey Resources (NJR) after its latest dividend announcement? The company’s board recently approved a modest bump in the quarterly dividend, pushing the annual payout rate to $1.90 per share. This isn’t just another routine update. The dividend increase comes alongside a continued streak of 30 consecutive years with annual raises, clearly showing management’s confidence in the business and its future earnings stream.

Looking at the bigger picture, New Jersey Resources has delivered steady returns for shareholders. Over the past year, shares have crept higher with a total return around 2%. Its long-term story looks a bit brighter, with the stock up 16% over three years and more than doubling over five. The company has showcased growth in returns on capital and kept an eye on reinvestment, helping build momentum over time even as the general utilities sector often moves at a slower pace.

After this steady climb and another dividend increase, do investors have a clear buying opportunity here, or is the market already pricing in future growth potential?

Most Popular Narrative: 11.9% Undervalued

The most widely followed narrative sees New Jersey Resources as undervalued by almost 12%, suggesting significant potential upside from current prices.

Strategic focus on energy efficiency, renewables, and infrastructure modernization positions the company to benefit from decarbonization trends and sustained dividend growth. However, 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.

Curious why analysts still see upside despite muted growth projections? There is a fascinating formula at play here, mixing steady earnings, mysterious margin forecasts, and a valuation multiple that might surprise you. Think you know what justifies this premium? Take a closer look to discover the underlying assumptions and future expectations keeping this narrative in the bullish camp.

Result: Fair Value of $53.57 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, if new decarbonization policies accelerate or if regulatory approval for key projects stumbles, New Jersey Resources’ growth story could swiftly lose momentum.

Find out about the key risks to this New Jersey Resources narrative.

Another View: SWS DCF Model Offers a Cautious Take

While analysts see upside based on future earnings multiples, our SWS DCF model tells a different story. It suggests New Jersey Resources might be overvalued at current prices. Could this more conservative outlook prove right?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out New Jersey Resources for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own New Jersey Resources Narrative

If our conclusions don't fit your outlook or you’d rather dig into the details yourself, you can pull together your own perspective quickly. Do it your way Do it your way.

A great starting point for your New Jersey Resources research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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