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On Friday, Mizuho Securities adjusted its price target for New Jersey Resources (NYSE:NJR) shares, a utility company, raising it to $47.00 from the previous $45.00. The firm has kept its Neutral rating on the stock. The adjustment comes in anticipation of a constructive outcome from the ongoing rate case for NJR's subsidiary, New Jersey Natural Gas (NJNG), which is expected to conclude in the first quarter of fiscal year 2025.
Mizuho anticipates that the resolution of the rate case will serve as a catalyst over the next few months, potentially restoring NJNG's contribution to NJR's earnings to its target range of 60-70% of net financial earnings per share (NFEPS) in fiscal year 2025. The rate case is seen as relatively straightforward, and a settlement is expected to align with the company's goals.
The firm also noted that the resolution of the rate case might shift investor focus towards NJR's non-utility segments, which demonstrate underlying strength and positive momentum. These segments could contribute to NJR's long-term NFEPS growth guidance, which is projected to be on the higher end of the 7-9% range over the medium term.
While the growth in non-utility earnings is considered to be of lower quality and may not substantially impact NJR's valuation, Mizuho suggests that it could lead to a greater appreciation for these businesses. This, in turn, could support NJR's future funding requirements. Despite the potential positive developments and the raised price target, Mizuho maintains a Neutral stance on NJR, citing the stock's fair valuation.
In other recent news, New Jersey Resources Corporation (NJR) has reported a strong performance in its third fiscal quarter of 2024. The company anticipates meeting its Net Financial Earnings Per Share (NFEPS) guidance of $2.85 to $3. NJR's Clean Energy Ventures is experiencing growth, while its utility business, projected to contribute over 60% to NFEPS, remains a key focus.
The company has also announced amendments to its credit agreements, including a reduction in its revolving credit facility and an extension of the maturity date. Over the next two years, NJR plans to invest $1.2 billion to $1.5 billion across the company, with expected cash flow from operations between $420 million and $450 million for fiscal 2024.
Furthermore, NJR has raised its quarterly dividend to $0.45 per share, a 7.1% increase from the previous dividend. This change reflects the board's confidence in the company's financial stability and long-term growth strategy. Lastly, NJR is exploring expansion opportunities for its S&T assets at Leaf River and is witnessing customer growth driven by new construction and conversions from other energy sources.
InvestingPro Insights
As New Jersey Resources (NYSE:NJR) navigates through its ongoing rate case, investors may find additional context in the company's financial health and market performance. According to InvestingPro data, NJR has a market capitalization of $4.73 billion and a Price/Earnings (P/E) ratio of 19.9, which adjusts slightly to 20.07 based on the last twelve months as of Q3 2024. Despite a revenue decline of 27.74% over the last twelve months, the company has experienced a quarterly revenue growth of 4.38% as of Q3 2024. This suggests a potential turnaround that might interest investors looking for growth signals.
InvestingPro Tips highlight that NJR has raised its dividend for an impressive 28 consecutive years and maintained dividend payments for 54 years, which could be a testament to the company's commitment to shareholder returns. Additionally, the stock is noted for trading with low price volatility, a characteristic that risk-averse investors might find appealing. For those seeking further insights, there are several more InvestingPro Tips available that delve deeper into NJR's financial and market performance, which could be particularly useful given the upcoming conclusion of NJR's rate case and its implications for future earnings.
With the stock trading near its 52-week high, and a dividend yield of 3.77% as of the latest data, NJR presents a mix of stability and income potential. Investors may want to consider these aspects alongside the rate case developments when evaluating the company's prospects. For a more comprehensive analysis, additional InvestingPro Tips are available, offering a broader scope of investment considerations.
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