New Jersey Resources Corporation

New Jersey Resources Corporation (NJR - Snapshot Report), the utility company, recently raised 2009 guidance. The company is also making a statement about its financial health as it actually increased its dividend by 10.7% for 2009. NJR is trading at 12.8x forward earnings.

Company Description

New Jersey Resources provides natural gas and energy services to customers in New Jersey and other states from the Gulf Coast to New England, as well as Canada. The company delivers natural gas through 6,500 miles of main to 500,000 customers.

New Jersey Resources has three business segments: New Jersey Natural Gas, NJR Home Services and NJR Energy Services.

New Jersey Natural Gas provides gas to about 500,000 New Jersey customers. NJR Home Services services home-appliances through sales and installations. Technicians install an service natural gas furnaces, hot water heaters, grills, outdoor lights nad air central air conditioning units.

NJR Energy Services provides wholesale energy services in New Jersey but also in states throughout the eastern seaboard and Canada. The segment provides delivery and storage of natural gas.

NJ Natural Gas Earnings Jumped 38% in the First Quarter 2009

On Feb 4, New Jersey Resources reported first-quarter 2009 earnings which fell from a year ago. Earnings per share were 76 cents compared to 87 cents in the year ago period. The company also missed on estimates, as analysts expected 85 cents.

NJ Natural Gas was the top performing segment as net income rose 38% to $23.1 million from $16.7 million in first quarter of 2008. The growth was the result of the resolution of the base rate case and higher gross margin from incentive programs. Customer growth remained steady, as the NJNG added 1,763 new customers in the quarter.

NJR Energy Services saw profit fall to $9.4 million from $19.1 million in the year ago period. The company expected the decrease, which was primarily due to narrower winter storage spreads and less contracted transportation capacity in the Northeast.

The company is bullish on the future of the Energy Services segment. It expects NJRES to account for between 30 and 35% of earnings for the year, the third highest level in its history.

Shareholders See 10.7% Dividend Increase

In Nov 2008, New Jersey Resources announced it was raising the dividend 10.7% to 31 cents from 28 cents per share. The new rate was effective as of Jan 2, 2009 for shareholders of record on Dec 15, 2008.

The stock is currently yielding 3.50%.

2009 Guidance Increased

On Feb 4, the company raised its 2009 earnings guidance to the range of $2.32 to $2.42 per share from its prior guidance of $2.30 to $2.40. New Jersey Resources is forecasting stronger-than-expected utility results.

Consensus Estimates Rise

Given the company's upward guidance revision, covering analysts have been raising estimates on the second quarter and full-year 2009. Second quarter estimates rose 7 cents to $1.99 per share in the last 30 days.

Full-year estimates climbed 2 cents to $2.37 in the last month.

Value Fundamentals

New Jersey Resources is a Zacks #1 Rank (strong buy) stock. It has surprised on estimates 2 out of the last 4 quarters.

NJR is trading with a forward P/E of 12.77. Its price-to-book is 1.88. The company has a 5-year average return on equity (ROE) of 14.75%.