New Jersey Resources Up to Strong Buy - Analyst Blog

On March 27, Zacks Investment Research upgraded New Jersey Resources Corp. NJR to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

New Jersey Resources has been witnessing rising earnings estimates on the back of strong fiscal first-quarter 2014 results and a higher earnings guidance for fiscal 2014. Moreover, this natural gas company delivered positive earnings surprises in the last 4 quarters with an average beat of 18.45%. The long-term expected earnings growth rate for this stock is 4.0%    

New Jersey Resources announced fiscal first-quarter 2014 (ended Dec 31) results on Feb 6. Operating earnings per share came in at 94 cents, surpassing the Zacks Consensus Estimate of 89 cents by 5.6%. The market reacted positively with the shares gaining 9.2% since the Feb 6 earnings release to close at $48.13 yesterday.

The company moreover raised its earnings per share projection for fiscal 2014 to $3.90–$4.10 from $2.75–$2.95 on the strength of its NJR Energy Services business. Extreme cold weather across the major part of U.S. increased demand for natural gas. New Jersey Resources' strategically located assets helped to meet customer demand in its service areas.

The company has been increasingly investing in infrastructure to serve a growing customer base. New Jersey Resources expects to add 14,000 and 16,000 new customers over the next two years, which we believe will further boost its results.

The new infrastructure programs such as the Southern Reliability Link and Howell liquefaction project are likely to provide the company with additional opportunities for rate base growth.

The Zacks Consensus Estimate for fiscal 2014 increased 47.9% to $4.03 per share. All estimates were revised higher over the last 30 days. The current estimate is within the guidance range provided by the company.

Other Stocks to Consider

Other stocks in the natural gas space worth considering are Delta Natural Gas Company, Inc. DGAS, AGL Resources Inc. GAS and Atmos Energy Corp. ATO.  Delta Natural Gas holds a Zacks Rank #1 (Strong Buy) while AGL Resources and Atmos Energy Corporation carry a Zacks Rank #2 (Buy).