It's been a good week for New Jersey Resources Corporation (NYSE:NJR) shareholders, because the company has just released its latest annual results, and the shares gained 3.5% to US$42.96. Revenues of US$2.6b were in line with forecasts, although earnings per share (EPS) came in below expectations at US$1.89, missing estimates by 3.6%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the latest consensus from New Jersey Resources's three analysts is for revenues of US$2.95b in 2020, which would reflect a decent 14% improvement in sales compared to the last 12 months. Earnings per share are expected to be US$1.90, roughly flat on the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$2.84b and earnings per share (EPS) of US$2.31 in 2020. While next year's revenue estimates increased, there was also a substantial drop in EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
There's been no major changes to an analyst price target of US$46.80, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values New Jersey Resources at US$53.00 per share, while the most bearish prices it at US$37.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the New Jersey Resources's past performance and to peers in the same market. For example, we noticed that New Jersey Resources's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 14%, well above its historical decline of 2.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 4.0% per year. Although New Jersey Resources's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. The consensus price target held steady at US$46.80, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple New Jersey Resources analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of New Jersey Resources's balance sheet, and whether we think New Jersey Resources is carrying too much debt, for free on our platform here.
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