New Jersey Resources Ramps Up Growth with Revised 2025 Outlook Amid Strong Segment Performances

New Jersey Resources Corporation (NYSE: NJR) has bolstered its financial outlook for fiscal 2025, raising its non-GAAP net financial earnings per share (NFEPS) guidance to a range of $3.15–$3.30, up from the previous $3.05–$3.20, driven by robust performances across its core business segments. The revision reflects strategic gains from its residential solar portfolio sale, strong winter-driven margins in Energy Services, and sustained growth in its regulated utility division, New Jersey Natural Gas (NJNG).

Key Drivers of the Revised Outlook

1. Energy Services Outperformance: The segment leveraged natural gas price volatility during the winter to boost financial margins, contributing to higher-than-expected results. Despite a slight year-over-year decline in revenues from older Asset Management Agreements (AMAs), the winter period’s volatility enabled NJR to capitalize on trading opportunities.

2. Residential Solar Portfolio Sale: The gain from the first-quarter sale of its residential solar business provided a one-time boost to fiscal 2025 NFE. This transaction not only offset declines in residential solar revenue post-sale but also positioned NJR to focus on higher-margin commercial solar projects.

3. NJNG’s Regulated Growth: NJNG’s NFE surged to $144.5 million in Q2, supported by a base rate case settlement that increased utility gross margins. Year-to-date NFE for NJNG reached $211.4 million, up 33% from fiscal 2024, underscoring the stability of its regulated utility business.

Segment Contributions and Financial Highlights

• NJNG: Accounts for 65–68% of total NFE, driven by infrastructure investments like its $150 million five-year Infrastructure Investment Program (IIP). Year-to-date capital expenditures for NJNG totaled $16.1 million, enhancing system reliability and safety.
• Clean Energy Ventures (CEV): Contributed 19–22% of NFE, with installed solar capacity reaching 417 MW as of March 2025. CEV’s net financial earnings rose to $44.2 million year-to-date, buoyed by the solar sale and higher solar electricity sales.
• Energy Services: Provided 9–11% of NFE despite a slight drop in AMA-related revenues. The segment’s Q2 NFE was $35.3 million, reflecting strong winter performance.

Year-to-date net income for fiscal 2025 hit $335.6 million ($3.35 per share), a 59% increase over fiscal 2024, while non-GAAP NFE rose to $3.07 per share, up from $2.15 per share.

Risks and Strategic Priorities

While NJR’s revised guidance is optimistic, risks remain. These include:
- Regulatory Uncertainty: Adelphia Gateway’s pending Federal Energy Regulatory Commission (FERC) rate case could impact Storage and Transportation earnings.
- Energy Market Volatility: Derivative positions and gas price fluctuations could affect GAAP results.
- SREC Pricing: Solar renewable energy credit (SREC) prices influence CEV’s profitability.

CEO Steve Westhoven emphasized NJR’s diversified model: "Our second-quarter results demonstrate the power of our complementary businesses—regulated utility growth, solar expansion, and energy services all contributed to outperformance."

Analyst and Market Perspective

Analysts remain cautiously optimistic. The brokerage consensus rating of 2.1 (Outperform) reflects confidence in NJR’s long-term strategy. However, GuruFocus’ one-year valuation estimate of $33.81—a 31% discount to the current stock price—hints at skepticism around sustained growth.

Conclusion: A Balanced Investment Thesis

New Jersey Resources’ revised outlook highlights its ability to capitalize on both regulated utility stability and renewable energy growth. With NJNG’s rate-case-driven earnings and CEV’s solar portfolio expansion, the company is well-positioned to exceed its $2.83 NFEPS baseline for fiscal 2025.

However, investors should weigh the risks of regulatory and market volatility. The stock’s 12-month average price target of $54.67 (a 10% upside from current levels) suggests analysts see value in its diversified model. For long-term investors, NJR’s $150 million IIP and 417 MW solar capacity signal a commitment to infrastructure and sustainability—key drivers of future earnings.

In summary, NJR’s revised guidance reflects operational excellence and strategic execution. While risks persist, the company’s diversified revenue streams and regulated utility tailwinds make it a compelling play in the energy sector.

Data as of May 2025. Past performance does not guarantee future results.