New Jersey Resources (NJR): A Misunderstood Energy Play in a Transformed Market

The energy transition is reshaping the utility sector, yet some companies remain undervalued despite aligning with regulatory and technological tailwinds. New Jersey Resources (NJR) is one such case. While its stock trades at a discount to both its historical averages and industry peers, the company is leveraging New Jersey's aggressive clean energy agenda to position itself as a resilient, growth-oriented player in a decarbonizing world.

Undervaluation Amid Strong Fundamentals

NJR's current price-to-earnings (P/E) ratio of 13.84 is 36% below its 10-year average of 21.71 and significantly lower than the Utilities sector average of 18.4 according to financial reports. This discount suggests the market may be underappreciating the company's earnings stability and growth potential. For context, analysts estimate the stock is trading at a 19% discount to its fair value, with a mean 12-month price target of $54.71 as reported in earnings call transcripts. Recent analyst activity reinforces this view: Mizuho upgraded NJR to Outperform in December 2025, citing "attractive valuation and strong fundamentals" in its research report, while Raymond James reaffirmed its Outperform rating with a $53.00 target as noted in market analysis.

Financial performance further supports the undervaluation thesis. In fiscal 2025, NJR reported net financial earnings of $329.6 million, or $3.29 per share, exceeding its guidance range of $3.20 to $3.30. This marks five consecutive years of outperformance, driven by investments in New Jersey Natural Gas (NJNG) and Clean Energy Ventures (CEV). The company's long-term NFE per share growth target of 7–9% remains intact, with fiscal 2026 guidance set at $3.03 to $3.18 as detailed in quarterly results.

Regulatory Resilience in a Policy-Driven State

New Jersey's regulatory environment is a critical tailwind for NJR. The state's updated Energy Master Plan, released in late 2025, mandates 100% clean energy by 2035, with interim targets including 22 gigawatts of solar capacity by 2050 and 2,000 megawatts of energy storage by 2030. These goals are not abstract aspirations but actionable mandates, supported by programs like the Garden State Energy Storage Program (GSESP) and the Successor Solar Incentive (SuSI) Program as outlined in policy documentation.

NJR has proactively aligned with these policies. In 2025, the company promoted Daniel Sergott to lead a newly formed Strategy function and Anne-Marie Peracchio to oversee Regulatory Affairs & Energy Efficiency. These moves underscore NJR's commitment to navigating regulatory complexity while capitalizing on opportunities in electrification and decarbonization. For instance, New Jersey's push to electrify transportation-nearing its 330,000 zero-emission vehicle target by 2025-creates demand for grid upgrades and energy services, areas where NJR's subsidiaries are already investing.

Clean Energy Growth: Projects and Financial Impact

NJR's clean energy ventures are not just strategic but financially material. In fiscal 2025, Clean Energy Ventures added 93 megawatts of in-service capacity, the highest annual addition in its history. This growth is supported by state incentives such as SuSI, which provides 15-year fixed revenue contracts for solar projects, and the GSESP, which targets 2,000 megawatts of storage by 2030.

The company's utility arm, NJNG, also plays a pivotal role. It invested $98 million under its SAVEGREEN® energy efficiency program in 2025, a record for the initiative. These investments align with New Jersey's focus on environmental justice, ensuring clean energy benefits reach overburdened communities. Meanwhile, NJR's leadership in community solar-bolstered by state legislation expanding such programs-positions it to capture 3,000 megawatts of new capacity by October 2025 as confirmed by state announcements.

A Misunderstood Play in a Transformed Market

Critics may argue that NJR's regulated utility model is vulnerable to the volatility of the energy transition. However, the company's dual focus on traditional infrastructure and clean energy ventures creates a balanced risk-reward profile. Its regulatory engagement ensures alignment with state mandates, while its clean energy investments-backed by long-term incentives-provide growth visibility.

At a P/E ratio 36% below its historical average and with analyst price targets implying 19% upside, NJR appears undervalued relative to its fundamentals and growth trajectory. For investors seeking exposure to the energy transition without the volatility of pure-play renewables, NJR offers a compelling, misunderstood opportunity.