Hook / Thesis
New Jersey Resources (NJR) is the kind of utility holding company that institutional investors reach for when they want predictability first and optional growth second. The core - New Jersey Natural Gas - supplies nearly 600,000 customers in a dense Northeast market and delivers steady regulated cash flow. Around that backbone sits a small but growing collection of nonregulated assets: commercial solar and midstream gas projects that can materially add to earnings if management executes.
My view: prioritize NJR as an income-oriented, position trade with a tactical growth kicker. The company just reported an earnings beat (02/02/2026) and raised the dividend cadence to $0.475/qtr, giving an annualized payout of ~$1.90 — roughly a 3.6% yield at today's ~$52.40 price. That combination - regulated cash flow, an improving yield, and optional upside from projects - supports a constructive trade: buy on modest weakness, trim into strength.
What the business is and why the market should care
New Jersey Resources is an energy services holding company. Its regulated utility, New Jersey Natural Gas, serves almost 600,000 residential, commercial and industrial customers across New Jersey, producing recurring, rate-regulated revenue. Nonregulated operations include commercial solar projects and a handful of large midstream natural gas projects intended to grow earnings beyond the utility's regulated returns.
Why investors should care: regulated utilities provide predictable earnings and strong free-cash characteristics through rate cases and long-lived infrastructure. That predictability is attractive in a higher-for-longer rate environment for two reasons: (1) investors who need cash can rely on a visible dividend stream; (2) the utility can fund discretionary growth selectively when financing markets are reasonable. NJR's recent filings show both the steady regulated business and the company deliberately funding growth via financing while investing in projects.
Recent financials and the hard numbers
The most recent quarter (fiscal Q1 2026, period ended 12/31/2025, SEC filing accepted 02/03/2026) shows:
- Revenues of $440.9 million for the quarter (reported in the Q1 FY2026 filing).
- Net income of $122.49 million and diluted EPS of roughly $1.21 for the quarter.
- Net cash flow from operating activities of $26.73 million for the quarter, offset by investing cash outflows of $179.5 million and financing inflows of $154.75 million.
- Balance sheet snapshot (Q1 FY2026): assets of $7.906 billion, equity attributable to parent of $2.472 billion, total liabilities of $5.4339 billion and noncurrent liabilities of $1.2219 billion.
Separately, the company reported an earnings release on 02/02/2026 where EPS came in at $1.17 and revenue at $604.85 million (both beats vs consensus). There is a gap between the SEC filing revenue number above and the earnings-release revenue figure in the calendar; the dataset contains both numbers. That likely reflects different presentation or consolidated line items in the release versus the 10-Q XML extract; either way, the message is consistent: the quarter beat expectations on both EPS and revenue.
On dividends: NJR declared a $0.475 quarterly cash dividend on 01/21/2026 with an ex-dividend date of 03/11/2026 and pay date 04/01/2026. Annualized, the $1.90 payout divided by the last close (~$52.42) implies a current yield of roughly 3.6%.
Valuation framing
Market data in the snapshot shows a last trade near $52.42 (most recent close). The dataset does not include market capitalization, consensus forward multiple, or direct peers in the utility space for apples-to-apples valuation. However, we can frame the valuation pragmatically:
- Price action: NJR has traded in a roughly $44-$53 range over the last 12 months and has recently moved into the low-50s. That puts today's price near the 52-week high, which tells us the market is paying up slightly for stability and yield.
- Yield logic: at today's price the 3.6% yield is competitive with many investment-grade utilities and looks fair for a regulated gas distributor with a modest growth pipeline. If the company continues to successfully execute midstream projects and commercial solar rollouts, that yield can be complemented with upside to earnings and a modest dividend increase over time.
- Balance-sheet caution: heavy investing (negative investing cash flow) is being funded by financing. Investors should watch leverage metrics and the cost of debt - the balance sheet is large (assets ~$7.9B) and liabilities are significant (~$5.43B), but noncurrent liabilities reported at $1.22B are not outsized for a regulated utility with long-lived assets.
Bottom line on valuation: without a market cap from the dataset, think in terms of income plus optional upside. The equity yield and recent earnings beats support a fair value in the mid-$50s for a patient income investor; buy opportunities arise on pullbacks into the high-$40s where yield expands and downside is limited by the regulated base.
Trade idea - actionable plan
Trade direction: Long (position trade)
Time horizon: Position (several months)
Risk level: Medium
Plan:
- Primary entry: 50.00-52.50 (use limit orders on weakness; today's close ~52.42). Buying at the low end of this band improves carry via higher yield.
- Alternate entry (if broader market sells off): 47.00-49.00 - this area has shown prior support in the past year and gives a better risk/reward.
- Stop loss: 46.00 (hard stop). Reasons: technical support cluster around the mid-40s and a close below $46 would indicate a structural break in the recent trading range and would likely push the yield materially higher and underline downside risks.
- Targets: take partial profits at $57.00 (near-term target; ~+8-10% from current) and scale out further at $64.00 (~+20% from current). If the company raises the dividend or posts consecutive beats and project wins, consider letting a core tranche run past $64 with a trailing stop.
Position sizing: limit any single trade to an allocation appropriate to your portfolio risk (e.g., 2-5% of total portfolio for a typical retail investor). A regulated utility should not dominate a growth portfolio.
Near-term catalysts to watch
- Regulatory rate case outcomes - any favorable settlement for New Jersey Natural Gas will lift allowed returns and provide upside to EPS and cash flow.
- Updates or wins on midstream natural gas projects - successful commercial progress or contracts could materially raise optional growth expectations.
- Quarterly earnings cadence - the recent 02/02/2026 print beat on EPS and revenue; follow-through in upcoming quarters would sustain momentum.
- Dividend announcements - management has been nudging the payout higher (latest $0.475 qtr); a sustained trend of dividend increases would re-rate the stock higher.
- Weather-driven winter demand - unusually cold weather increases gas volumes and near-term utility revenue, which can translate into beats and upside revisions.
Risks and counterarguments
No trade is free. Below are the primary risks and a counterargument to the bullish thesis.
- Regulatory risk - utility earnings depend on rate case outcomes. An adverse decision or delayed approval reduces the allowance on invested capital and compresses returns. NJR has filed for rate revisions in the past; regulators can change timelines and outcomes.
- Project execution and capital intensity - the company is investing heavily (Q1 FY2026 investing cash outflow of $179.5M) and financing activity is supporting that spend (financing inflow $154.75M). If midstream or solar projects are delayed, costs overrun, or returns fall short, the financed growth could dilute returns and pressure the stock.
- Commodity and weather volatility - although the utility is regulated, commodity-driven businesses in the portfolio (midstream) are exposed to natural gas market swings and extreme weather can be a double-edged sword (higher revenue but also higher pass-through costs and potential bad-debt risk for customers).
- Interest-rate and financing risk - higher borrowing costs raise the company’s capital cost just as it finances growth. The dataset shows continued financing to fund investing; a sustained rise in rates would squeeze margins on un-remunerated growth until rate cases catch up.
- Insider signal / valuation skepticism - past insider selling (news item from 07/17/2024) can be read as management de-risking or as a signal that upside is already priced in. The stock currently trades near its 52-week highs which reduces room for multiple expansion absent positive catalysts.
Counterargument: The market may already be pricing NJR as a stable, dividend-paying utility with limited downside; near-term upside may be constrained unless regulatory outcomes or nonregulated projects deliver material surprises. If you prefer a cleaner pure-play regulated utility or a name with faster visible growth, NJR may underperform those alternatives.
Conclusion - clear stance and rule for changing my mind
Stance: I recommend a buy on weakness approach for NJR with a position horizon of several months. The company offers predictable regulated cash flow and a growing dividend (implied ~3.6% yield) and recent earnings have beaten consensus. Optional upside from midstream and commercial solar investments makes the risk/reward asymmetric at the right entry.
What would change my mind?
- If the next regulatory filing results in material downward adjustments to allowed returns or if a rate case is delayed significantly, I would move to neutral/avoid.
- If financing costs jump and management pivots to heavy dilution (large equity issuance) to fund projects, I would downgrade the trade given the balance-sheet implications.
- If the company reports a sequence of misses or announces project cancellations/impairments on its midstream solar portfolio, I would trim or exit positions.
Execution checklist for new buys: enter between $50-$52.50 when possible, use $46 as a stop, take partial profits at $57 and $64. Monitor upcoming rate-case news, quarterly results, and any material change to dividend policy or financing plans.
Disclosure: This is a trade idea for educational purposes and not personalised financial advice. Position size and suitability depend on your portfolio and risk tolerance.