On Wednesday, Mizuho (NYSE:MFG) maintained its Neutral rating on New Jersey Resources (NYSE:NYSE:NJR), with a steady price target of $47.00. The firm's assessment came after NJR reported a modest earnings beat for the fourth quarter of fiscal year 2024, with Non-Fuel Earnings Per Share (NFEPS) of $0.89 compared to the estimated $0.87. NJR also provided its initial guidance for fiscal year 2025, projecting NFEPS in the range of $3.05 to $3.20.
This forecast includes a one-time gain from the company's recently announced sale of its residential solar portfolio, which is valued at approximately $133 million. Excluding this gain, NJR's NFEPS for fiscal year 2025 would be around $2.83, which is slightly below Mizuho's estimate of $2.85. Despite this, the firm expressed a positive view of NJR's update, highlighting the profitable nature of the residential lease business sale and its role in streamlining the company's Clean Energy Ventures (CEV) segment.
Additionally, Mizuho noted NJR's reiteration of its long-term growth rate of approximately 7-9%. The New Jersey Natural Gas (NJNG) rate case settlement was also seen as a positive, with expectations for better-than-anticipated contributions from the NJNG segment, which makes up about 75% of NJR's Non-Fuel Earnings, excluding the "Sunlight Advantage" sale.
The analyst's commentary underscored the advantageous aspects of NJR's recent developments, such as the profitability from the sale and the affirmation of its growth rate. However, these updates did not alter Mizuho's stance that NJR's long-standing growth guidance could potentially reach the higher end of the spectrum in the medium term.
In other recent news, New Jersey Resources (NJR) has reported a successful fiscal year 2024, surpassing their Net Financial Earnings Per Share (NFEPS) guidance for the fourth consecutive year. The energy infrastructure firm ended the year with an NFEPS of $2.95, up from $2.70 in the previous year. This is a result of NJR's diversified business model and strategic investments in clean energy and utility infrastructure. The company has set a growth target of 7-9% for NFEPS and aims for a total shareholder return of 11-13%.
In further developments, New Jersey Natural Gas, an NJR subsidiary, has secured a $157 million annual revenue increase. Moreover, NJR's Clean Energy Ventures has completed significant projects and sold its residential solar portfolio. Looking forward, the company plans capital expenditures ranging from $1.3 to $1.6 billion over the next two years, focusing on utility infrastructure and clean energy.
NJR has rebased its NFEPS to $2.83 per share and set its initial guidance for fiscal 2025 between $3.05 and $3.20 per share. The company's President and CEO, Steve Westhoven, emphasized NJR's commitment to sustainable growth and delivering superior returns, while CFO Roberto Bell highlighted the firm's disciplined capital allocation strategy.
InvestingPro Insights
New Jersey Resources' (NYSE:NJR) recent performance and future outlook are further illuminated by data from InvestingPro. The company's market capitalization stands at $5.04 billion, with a P/E ratio of 17.64, indicating a moderate valuation relative to earnings. This aligns with Mizuho's neutral stance on the stock.
An InvestingPro Tip highlights that NJR has raised its dividend for 29 consecutive years, showcasing a strong commitment to shareholder returns. This is particularly relevant given the company's recent earnings beat and its projected growth rate of 7-9%, as mentioned in the article. The current dividend yield of 3.55% may be attractive to income-focused investors.
Another notable InvestingPro Tip reveals that NJR is trading near its 52-week high, with the stock price at 97.9% of its peak. This could be attributed to the positive developments outlined in the article, including the profitable sale of its residential solar portfolio and the favorable NJNG rate case settlement.
For investors seeking a deeper understanding of NJR's financial health and growth prospects, InvestingPro offers 8 additional tips, providing a more comprehensive analysis of the company's position in the utilities sector.
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