Intrinsic value of South Jersey Industries - SJI

Previous Close

$33.95

  Intrinsic Value

$93.46

stock screener

  Rating & Target

str. buy

+175%

  Value-price divergence*

+106%

Previous close

$33.95

 
Intrinsic value

$93.46

 
Up/down potential

+175%

 
Rating

str. buy

 
Value-price divergence*

+106%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SJI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.02
  27.90
  25.61
  23.55
  21.69
  20.02
  18.52
  17.17
  15.95
  14.86
  13.87
  12.98
  12.19
  11.47
  10.82
  10.24
  9.71
  9.24
  8.82
  8.44
  8.09
  7.78
  7.51
  7.26
  7.03
  6.83
  6.64
  6.48
  6.33
  6.20
  6.08
Revenue, $m
  0
  1,326
  1,666
  2,058
  2,505
  3,006
  3,563
  4,175
  4,841
  5,560
  6,332
  7,154
  8,026
  8,946
  9,914
  10,929
  11,991
  13,099
  14,255
  15,457
  16,708
  18,009
  19,361
  20,765
  22,225
  23,742
  25,320
  26,960
  28,667
  30,444
  32,295
Variable operating expenses, $m
 
  759
  953
  1,177
  1,432
  1,719
  2,037
  2,387
  2,767
  3,178
  3,619
  4,089
  4,587
  5,113
  5,666
  6,246
  6,853
  7,487
  8,147
  8,834
  9,549
  10,292
  11,065
  11,868
  12,702
  13,569
  14,471
  15,408
  16,384
  17,399
  18,457
Fixed operating expenses, $m
 
  267
  273
  280
  287
  294
  302
  309
  317
  325
  333
  341
  350
  358
  367
  377
  386
  396
  406
  416
  426
  437
  448
  459
  470
  482
  494
  506
  519
  532
  545
Total operating expenses, $m
  847
  1,026
  1,226
  1,457
  1,719
  2,013
  2,339
  2,696
  3,084
  3,503
  3,952
  4,430
  4,937
  5,471
  6,033
  6,623
  7,239
  7,883
  8,553
  9,250
  9,975
  10,729
  11,513
  12,327
  13,172
  14,051
  14,965
  15,914
  16,903
  17,931
  19,002
Operating income, $m
  189
  301
  440
  601
  786
  994
  1,225
  1,479
  1,757
  2,057
  2,380
  2,724
  3,089
  3,475
  3,881
  4,306
  4,752
  5,217
  5,702
  6,208
  6,733
  7,280
  7,848
  8,439
  9,053
  9,691
  10,355
  11,046
  11,764
  12,513
  13,292
EBITDA, $m
  299
  391
  552
  740
  954
  1,195
  1,464
  1,759
  2,081
  2,430
  2,804
  3,203
  3,626
  4,073
  4,544
  5,038
  5,554
  6,094
  6,656
  7,242
  7,851
  8,485
  9,143
  9,828
  10,540
  11,280
  12,049
  12,849
  13,682
  14,550
  15,453
Interest expense (income), $m
  32
  46
  70
  98
  130
  166
  208
  253
  303
  358
  417
  480
  547
  619
  694
  773
  857
  944
  1,034
  1,129
  1,228
  1,330
  1,437
  1,547
  1,662
  1,782
  1,906
  2,035
  2,170
  2,310
  2,455
Earnings before tax, $m
  168
  255
  370
  504
  656
  827
  1,017
  1,226
  1,454
  1,699
  1,963
  2,244
  2,542
  2,856
  3,187
  3,533
  3,895
  4,274
  4,668
  5,079
  5,506
  5,950
  6,412
  6,892
  7,390
  7,909
  8,449
  9,010
  9,595
  10,203
  10,837
Tax expense, $m
  54
  69
  100
  136
  177
  223
  275
  331
  393
  459
  530
  606
  686
  771
  860
  954
  1,052
  1,154
  1,260
  1,371
  1,487
  1,606
  1,731
  1,861
  1,995
  2,135
  2,281
  2,433
  2,591
  2,755
  2,926
Net income, $m
  119
  186
  270
  368
  479
  604
  743
  895
  1,061
  1,241
  1,433
  1,638
  1,856
  2,085
  2,326
  2,579
  2,844
  3,120
  3,408
  3,707
  4,019
  4,343
  4,680
  5,031
  5,395
  5,774
  6,168
  6,577
  7,004
  7,448
  7,911

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  18
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,731
  4,754
  5,971
  7,377
  8,978
  10,776
  12,772
  14,965
  17,352
  19,930
  22,695
  25,641
  28,766
  32,065
  35,535
  39,173
  42,979
  46,951
  51,092
  55,403
  59,887
  64,548
  69,393
  74,428
  79,660
  85,098
  90,752
  96,632
  102,751
  109,120
  115,753
Adjusted assets (=assets-cash), $m
  3,713
  4,754
  5,971
  7,377
  8,978
  10,776
  12,772
  14,965
  17,352
  19,930
  22,695
  25,641
  28,766
  32,065
  35,535
  39,173
  42,979
  46,951
  51,092
  55,403
  59,887
  64,548
  69,393
  74,428
  79,660
  85,098
  90,752
  96,632
  102,751
  109,120
  115,753
Revenue / Adjusted assets
  0.000
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
Average production assets, $m
  694
  887
  1,115
  1,377
  1,676
  2,011
  2,384
  2,793
  3,239
  3,720
  4,236
  4,786
  5,369
  5,985
  6,633
  7,312
  8,022
  8,764
  9,536
  10,341
  11,178
  12,048
  12,952
  13,892
  14,869
  15,884
  16,939
  18,036
  19,179
  20,367
  21,605
Working capital, $m
  -480
  38
  48
  60
  73
  87
  103
  121
  140
  161
  184
  207
  233
  259
  288
  317
  348
  380
  413
  448
  485
  522
  561
  602
  645
  689
  734
  782
  831
  883
  937
Total debt, $m
  1,336
  1,998
  2,793
  3,712
  4,757
  5,931
  7,234
  8,666
  10,225
  11,908
  13,714
  15,638
  17,678
  19,832
  22,098
  24,474
  26,959
  29,553
  32,257
  35,072
  38,000
  41,044
  44,208
  47,495
  50,912
  54,463
  58,155
  61,995
  65,990
  70,149
  74,480
Total liabilities, $m
  2,441
  3,104
  3,899
  4,818
  5,863
  7,037
  8,340
  9,772
  11,331
  13,014
  14,820
  16,744
  18,784
  20,938
  23,204
  25,580
  28,065
  30,659
  33,363
  36,178
  39,106
  42,150
  45,314
  48,601
  52,018
  55,569
  59,261
  63,101
  67,096
  71,255
  75,586
Total equity, $m
  1,289
  1,650
  2,072
  2,560
  3,115
  3,739
  4,432
  5,193
  6,021
  6,916
  7,875
  8,898
  9,982
  11,127
  12,331
  13,593
  14,914
  16,292
  17,729
  19,225
  20,781
  22,398
  24,079
  25,826
  27,642
  29,529
  31,491
  33,531
  35,654
  37,864
  40,166
Total liabilities and equity, $m
  3,730
  4,754
  5,971
  7,378
  8,978
  10,776
  12,772
  14,965
  17,352
  19,930
  22,695
  25,642
  28,766
  32,065
  35,535
  39,173
  42,979
  46,951
  51,092
  55,403
  59,887
  64,548
  69,393
  74,427
  79,660
  85,098
  90,752
  96,632
  102,750
  109,119
  115,752
Debt-to-equity ratio
  1.036
  1.210
  1.350
  1.450
  1.530
  1.590
  1.630
  1.670
  1.700
  1.720
  1.740
  1.760
  1.770
  1.780
  1.790
  1.800
  1.810
  1.810
  1.820
  1.820
  1.830
  1.830
  1.840
  1.840
  1.840
  1.840
  1.850
  1.850
  1.850
  1.850
  1.850
Adjusted equity ratio
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347
  0.347

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  119
  186
  270
  368
  479
  604
  743
  895
  1,061
  1,241
  1,433
  1,638
  1,856
  2,085
  2,326
  2,579
  2,844
  3,120
  3,408
  3,707
  4,019
  4,343
  4,680
  5,031
  5,395
  5,774
  6,168
  6,577
  7,004
  7,448
  7,911
Depreciation, amort., depletion, $m
  110
  89
  112
  138
  168
  202
  239
  280
  324
  372
  424
  479
  537
  598
  663
  731
  802
  876
  954
  1,034
  1,118
  1,205
  1,295
  1,389
  1,487
  1,588
  1,694
  1,804
  1,918
  2,037
  2,161
Funds from operations, $m
  298
  276
  382
  506
  647
  805
  981
  1,175
  1,386
  1,613
  1,857
  2,117
  2,393
  2,683
  2,989
  3,310
  3,646
  3,996
  4,361
  4,741
  5,137
  5,548
  5,976
  6,420
  6,882
  7,362
  7,862
  8,381
  8,922
  9,485
  10,072
Change in working capital, $m
  36
  8
  10
  11
  13
  15
  16
  18
  19
  21
  22
  24
  25
  27
  28
  29
  31
  32
  34
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
Cash from operations, $m
  262
  267
  372
  495
  634
  791
  965
  1,157
  1,366
  1,592
  1,835
  2,093
  2,367
  2,657
  2,961
  3,281
  3,615
  3,964
  4,328
  4,707
  5,101
  5,510
  5,936
  6,379
  6,840
  7,318
  7,816
  8,334
  8,872
  9,433
  10,018
Maintenance CAPEX, $m
  0
  -69
  -89
  -111
  -138
  -168
  -201
  -238
  -279
  -324
  -372
  -424
  -479
  -537
  -598
  -663
  -731
  -802
  -876
  -954
  -1,034
  -1,118
  -1,205
  -1,295
  -1,389
  -1,487
  -1,588
  -1,694
  -1,804
  -1,918
  -2,037
New CAPEX, $m
  -278
  -194
  -227
  -262
  -299
  -336
  -373
  -409
  -446
  -481
  -516
  -550
  -583
  -616
  -648
  -679
  -710
  -742
  -773
  -805
  -837
  -870
  -904
  -940
  -977
  -1,015
  -1,055
  -1,098
  -1,142
  -1,189
  -1,238
Cash from investing activities, $m
  -245
  -263
  -316
  -373
  -437
  -504
  -574
  -647
  -725
  -805
  -888
  -974
  -1,062
  -1,153
  -1,246
  -1,342
  -1,441
  -1,544
  -1,649
  -1,759
  -1,871
  -1,988
  -2,109
  -2,235
  -2,366
  -2,502
  -2,643
  -2,792
  -2,946
  -3,107
  -3,275
Free cash flow, $m
  17
  4
  56
  121
  197
  288
  392
  510
  641
  787
  947
  1,119
  1,305
  1,504
  1,715
  1,938
  2,174
  2,420
  2,679
  2,948
  3,230
  3,523
  3,827
  4,144
  4,474
  4,816
  5,172
  5,542
  5,927
  6,327
  6,743
Issuance/(repayment) of debt, $m
  -135
  680
  795
  918
  1,045
  1,174
  1,303
  1,432
  1,559
  1,683
  1,805
  1,924
  2,040
  2,154
  2,266
  2,376
  2,485
  2,594
  2,704
  2,815
  2,928
  3,044
  3,164
  3,288
  3,416
  3,551
  3,692
  3,840
  3,995
  4,159
  4,331
Issuance/(repurchase) of shares, $m
  214
  174
  152
  120
  77
  20
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  79
  854
  947
  1,038
  1,122
  1,194
  1,303
  1,432
  1,559
  1,683
  1,805
  1,924
  2,040
  2,154
  2,266
  2,376
  2,485
  2,594
  2,704
  2,815
  2,928
  3,044
  3,164
  3,288
  3,416
  3,551
  3,692
  3,840
  3,995
  4,159
  4,331
Total cash flow (excl. dividends), $m
  96
  859
  1,004
  1,159
  1,319
  1,482
  1,695
  1,941
  2,200
  2,471
  2,752
  3,044
  3,346
  3,658
  3,981
  4,314
  4,659
  5,014
  5,382
  5,763
  6,158
  6,567
  6,991
  7,432
  7,890
  8,367
  8,864
  9,382
  9,922
  10,486
  11,075
Retained Cash Flow (-), $m
  -251
  -361
  -422
  -488
  -555
  -624
  -693
  -761
  -828
  -895
  -959
  -1,023
  -1,084
  -1,145
  -1,204
  -1,262
  -1,321
  -1,379
  -1,437
  -1,496
  -1,556
  -1,618
  -1,681
  -1,747
  -1,816
  -1,887
  -1,962
  -2,040
  -2,123
  -2,210
  -2,302
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  498
  581
  671
  764
  858
  1,002
  1,181
  1,372
  1,576
  1,793
  2,021
  2,262
  2,514
  2,777
  3,052
  3,338
  3,636
  3,946
  4,267
  4,602
  4,949
  5,310
  5,685
  6,075
  6,480
  6,902
  7,341
  7,799
  8,276
  8,773
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  460
  493
  518
  531
  533
  552
  569
  573
  563
  541
  509
  468
  421
  371
  320
  269
  221
  178
  139
  106
  79
  57
  40
  28
  18
  12
  7
  4
  3
  1
Current shareholders' claim on cash, %
  100
  94.0
  90.0
  87.6
  86.4
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1
  86.1

South Jersey Industries, Inc., through its subsidiaries, provides energy-related products and services. It engages in the purchase, transmission, and sale of natural gas. The company also sells natural gas and pipeline transportation capacity on a wholesale basis to residential, commercial, and industrial customers on the interstate pipeline system, as well as transports natural gas purchased directly from producers or suppliers to their customers. As of December 31, 2015, it had approximately 122.7 miles of mains in the transmission system and 6,503 miles of mains in the distribution system; and served 373,100 residential, commercial, and industrial customers in southern New Jersey. In addition, the company develops, owns, and operates energy projects, such as thermal facilities, combined heat and power facilities, landfill gas-fired electric production facilities, and solar projects that provide cooling, heating, and emergency power. Further, it markets natural gas storage, commodity, and transportation assets on a wholesale basis for energy marketers, electric and gas utilities, power plants, and natural gas producers in the mid-Atlantic, Appalachian, and southern regions of the United States. Additionally, the company acquires and markets natural gas and electricity to retail end users, as well as markets total energy management services; owns oil, gas, and mineral rights in the Marcellus Shale region of Pennsylvania; and services residential and small commercial HVAC systems, and installs small commercial HVAC systems, as well as provides plumbing services and services appliances. South Jersey Industries, Inc. was founded in 1910 and is based in Folsom, New Jersey.

FINANCIAL RATIOS  of  South Jersey Industries (SJI)

Valuation Ratios
P/E Ratio 22.7
Price to Sales 2.6
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 10.3
Price to Free Cash Flow -168.6
Growth Rates
Sales Growth Rate 8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.7%
Cap. Spend. - 3 Yr. Gr. Rate -2.6%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 62.7%
Total Debt to Equity 103.6%
Interest Coverage 6
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 4.6%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 10.2%
Return On Equity - 3 Yr. Avg. 10.6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 29.9%
EBITDA Margin - 3 Yr. Avg. 27.1%
Operating Margin 18.3%
Oper. Margin - 3 Yr. Avg. 16.4%
Pre-Tax Margin 16.2%
Pre-Tax Margin - 3 Yr. Avg. 14.2%
Net Profit Margin 11.5%
Net Profit Margin - 3 Yr. Avg. 11.1%
Effective Tax Rate 32.1%
Eff/ Tax Rate - 3 Yr. Avg. 12.7%
Payout Ratio 68.9%

SJI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SJI stock intrinsic value calculation we used $1037 million for the last fiscal year's total revenue generated by South Jersey Industries. The default revenue input number comes from 2016 income statement of South Jersey Industries. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SJI stock valuation model: a) initial revenue growth rate of 27.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.2%, whose default value for SJI is calculated based on our internal credit rating of South Jersey Industries, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of South Jersey Industries.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SJI stock the variable cost ratio is equal to 57.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $260 million in the base year in the intrinsic value calculation for SJI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for South Jersey Industries.

Corporate tax rate of 27% is the nominal tax rate for South Jersey Industries. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SJI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SJI are equal to 66.9%.

Life of production assets of 10 years is the average useful life of capital assets used in South Jersey Industries operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SJI is equal to 2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1289 million for South Jersey Industries - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 79.807 million for South Jersey Industries is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of South Jersey Industries at the current share price and the inputted number of shares is $2.7 billion.

RELATED COMPANIES Price Int.Val. Rating
NJR New Jersey Res 41.70 71.81  str.buy
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NFG National Fuel 59.60 4.43  str.sell
NI NiSource 26.51 36.74  buy
CNP CenterPoint En 28.08 159.03  str.buy

COMPANY NEWS

▶ South Jersey Industries posts 1Q profit   [May-09-17 09:33AM  Associated Press]
▶ Top Ranked Income Stocks to Buy for May 2nd   [May-02-17 10:47AM  Zacks]
▶ A Small-Cap Sector ETF That's Working   [Apr-11-17 12:41PM  Investopedia]
▶ South Jersey Industries posts 4Q profit   [05:00AM  Associated Press]
▶ South Jersey Industries: SJI Reports FY and Q4 2016 Results   [Feb-23-17 09:27PM  GlobeNewswire]
▶ Is South Jersey Industries Inc (SJI) A Good Stock To Buy?   [Dec-12-16 08:55AM  at Insider Monkey]
▶ Six Dividend Stocks Sending More Cash To Shareholders   [Nov-28-16 10:56AM  at Insider Monkey]
▶ [$$] Why Your 401(k) Is Not Safe At Home   [Jul-30-16 12:17AM  at The Wall Street Journal]
Stock chart of SJI Financial statements of SJI Annual reports of SJI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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