Reasons to Add New Jersey Resources (NJR) to Your Portfolio
New Jersey Resources NJR provides safe and reliable natural gas and clean energy services, including transportation, distribution, asset management and home services. The company’s reliable service results in customer growth. Given its dividend history and growth opportunities, NJR makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) has moved up 1.5% in the past 90 days to $2.77.
The Zacks Consensus Estimate for the company’s fiscal 2024 sales indicates a year-over-year improvement of 3.4%.
NJR’s long-term (three to five years) earnings growth rate is 6%. It delivered an average earnings surprise of 118.6% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, New Jersey Resources’ ROE is 13.24%, higher than the industry’s average of 10.41%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.
Dividend Growth
New Jersey Resources has been increasing shareholders' value by paying dividends. In November 2023, its board of directors declared a 7.7% increase in quarterly dividends, which is 42 cents per share. This results in an annualized dividend of $1.68 per share compared with the previous figure of $1.56. Its current dividend yield is 3.81%, better than the Zacks S&P 500 Composite’s 1.42%.
Systematic Investments & Customer Growth
New Jersey Resources makes consistent investments to upgrade and maintain its existing infrastructure to provide 24x7 reliable services to its customers. In fiscal 2023, NJR made capital investments of $596 million and expects the same in the range of $608-$743 million for fiscal 2024.
The company added 8,800 new customers in fiscal 2023 compared with 7,808 in fiscal 2022. NJR expects its annual customer growth rate to be approximately 1.9%. This anticipated customer growth represents approximately $8.5 million in new annual utility gross margin.
Price Performance
In the past three months, the stock has returned 3.3% against the industry’s average 1.6% decline.
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Other Stocks to Consider
A few other top-ranked stocks from the same sector are Southwest Gas Holdings Inc. SWX, sporting a Zacks Rank #1 (Strong Buy), and Sempra Energy SRE and PPL Corporation PPL, both holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
SWX’s long-term earnings growth rate is 5%. The company delivered an average earnings surprise of 104% in the last four quarters.
SRE’s long-term (three to five years) earnings growth rate is 4.95%. The company delivered an average earnings surprise of 9% in the last four quarters.
PPL’s long-term earnings growth rate is 7.42%. The consensus estimate for the company’s 2023 EPS is pegged at $1.58, indicating a year-over-year improvement of 12.1%.
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PPL Corporation (PPL) : Free Stock Analysis Report
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NewJersey Resources Corporation (NJR) : Free Stock Analysis Report
