Intrinsic value of South Jersey Industries - SJI

Previous Close

$32.65

  Intrinsic Value

$336.33

stock screener

  Rating & Target

str. buy

+930%

Previous close

$32.65

 
Intrinsic value

$336.33

 
Up/down potential

+930%

 
Rating

str. buy

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 2.6

 

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
  58.40
  53.06
  48.25
  43.93
  40.04
  36.53
  33.38
  30.54
  27.99
  25.69
  23.62
  21.76
  20.08
  18.57
  17.22
  15.99
  14.90
  13.91
  13.02
  12.21
  11.49
  10.84
  10.26
  9.73
  9.26
  8.83
  8.45
  8.11
  7.79
  7.52
Revenue, $m
  0
  1,643
  2,514
  3,727
  5,365
  7,513
  10,257
  13,681
  17,859
  22,857
  28,729
  35,514
  43,241
  51,925
  61,569
  72,169
  83,713
  96,182
  109,556
  123,815
  138,937
  154,904
  171,700
  189,315
  207,740
  226,976
  247,026
  267,900
  289,614
  312,189
  335,650
Variable operating expenses, $m
 
  939
  1,437
  2,131
  3,067
  4,294
  5,863
  7,819
  10,207
  13,064
  16,420
  20,297
  24,713
  29,676
  35,188
  41,246
  47,843
  54,970
  62,613
  70,763
  79,405
  88,531
  98,130
  108,197
  118,727
  129,721
  141,180
  153,110
  165,520
  178,421
  191,830
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
  1,206
  1,710
  2,411
  3,354
  4,588
  6,165
  8,128
  10,524
  13,389
  16,753
  20,638
  25,063
  30,034
  35,555
  41,623
  48,229
  55,366
  63,019
  71,179
  79,831
  88,968
  98,578
  108,656
  119,197
  130,203
  141,674
  153,616
  166,039
  178,953
  192,375
Operating income, $m
  189
  437
  804
  1,317
  2,011
  2,924
  4,093
  5,552
  7,335
  9,469
  11,976
  14,876
  18,179
  21,891
  26,014
  30,547
  35,483
  40,816
  46,537
  52,637
  59,106
  65,937
  73,123
  80,659
  88,543
  96,773
  105,352
  114,284
  123,575
  133,235
  143,275
EBITDA, $m
  299
  609
  1,067
  1,707
  2,572
  3,710
  5,166
  6,983
  9,202
  11,858
  14,980
  18,589
  22,699
  27,318
  32,450
  38,091
  44,234
  50,870
  57,989
  65,579
  73,629
  82,129
  91,071
  100,448
  110,258
  120,499
  131,174
  142,288
  153,849
  165,869
  178,361
Interest expense (income), $m
  32
  46
  96
  167
  267
  401
  577
  802
  1,082
  1,424
  1,834
  2,315
  2,871
  3,504
  4,215
  5,005
  5,873
  6,819
  7,840
  8,936
  10,104
  11,343
  12,651
  14,027
  15,469
  16,979
  18,555
  20,197
  21,907
  23,686
  25,535
Earnings before tax, $m
  168
  391
  708
  1,149
  1,745
  2,524
  3,516
  4,751
  6,253
  8,044
  10,143
  12,561
  15,308
  18,387
  21,799
  25,542
  29,610
  33,998
  38,697
  43,701
  49,002
  54,594
  60,472
  66,633
  73,073
  79,794
  86,798
  94,087
  101,668
  109,549
  117,740
Tax expense, $m
  54
  105
  191
  310
  471
  681
  949
  1,283
  1,688
  2,172
  2,739
  3,392
  4,133
  4,964
  5,886
  6,896
  7,995
  9,179
  10,448
  11,799
  13,231
  14,740
  16,328
  17,991
  19,730
  21,544
  23,435
  25,403
  27,450
  29,578
  31,790
Net income, $m
  119
  285
  517
  839
  1,274
  1,842
  2,567
  3,468
  4,565
  5,872
  7,404
  9,170
  11,175
  13,423
  15,913
  18,646
  21,615
  24,818
  28,249
  31,902
  35,772
  39,854
  44,145
  48,642
  53,343
  58,250
  63,362
  68,684
  74,218
  79,971
  85,950

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
  5,887
  9,011
  13,360
  19,228
  26,927
  36,764
  49,035
  64,011
  81,925
  102,971
  127,292
  154,987
  186,111
  220,679
  258,671
  300,045
  344,737
  392,675
  443,782
  497,983
  555,212
  615,414
  678,547
  744,589
  813,534
  885,398
  960,216
  1,038,044
  1,118,956
  1,203,048
Adjusted assets (=assets-cash), $m
  3,713
  5,887
  9,011
  13,360
  19,228
  26,927
  36,764
  49,035
  64,011
  81,925
  102,971
  127,292
  154,987
  186,111
  220,679
  258,671
  300,045
  344,737
  392,675
  443,782
  497,983
  555,212
  615,414
  678,547
  744,589
  813,534
  885,398
  960,216
  1,038,044
  1,118,956
  1,203,048
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
  1,099
  1,682
  2,494
  3,589
  5,026
  6,862
  9,152
  11,948
  15,291
  19,220
  23,759
  28,929
  34,738
  41,190
  48,281
  56,004
  64,345
  73,293
  82,832
  92,949
  103,631
  114,868
  126,651
  138,978
  151,847
  165,260
  179,225
  193,752
  208,854
  224,550
Working capital, $m
  -480
  48
  73
  108
  156
  218
  297
  397
  518
  663
  833
  1,030
  1,254
  1,506
  1,786
  2,093
  2,428
  2,789
  3,177
  3,591
  4,029
  4,492
  4,979
  5,490
  6,024
  6,582
  7,164
  7,769
  8,399
  9,053
  9,734
Total debt, $m
  1,336
  2,739
  4,778
  7,618
  11,450
  16,477
  22,901
  30,914
  40,693
  52,391
  66,134
  82,016
  100,101
  120,425
  142,997
  167,806
  194,823
  224,007
  255,311
  288,683
  324,077
  361,448
  400,759
  441,985
  485,110
  530,132
  577,059
  625,915
  676,737
  729,572
  784,484
Total liabilities, $m
  2,441
  3,845
  5,884
  8,724
  12,556
  17,583
  24,007
  32,020
  41,799
  53,497
  67,240
  83,122
  101,207
  121,531
  144,103
  168,912
  195,929
  225,113
  256,417
  289,789
  325,183
  362,554
  401,865
  443,091
  486,216
  531,238
  578,165
  627,021
  677,843
  730,678
  785,590
Total equity, $m
  1,289
  2,043
  3,127
  4,636
  6,672
  9,344
  12,757
  17,015
  22,212
  28,428
  35,731
  44,170
  53,781
  64,581
  76,576
  89,759
  104,116
  119,624
  136,258
  153,992
  172,800
  192,659
  213,549
  235,456
  258,372
  282,296
  307,233
  333,195
  360,201
  388,278
  417,458
Total liabilities and equity, $m
  3,730
  5,888
  9,011
  13,360
  19,228
  26,927
  36,764
  49,035
  64,011
  81,925
  102,971
  127,292
  154,988
  186,112
  220,679
  258,671
  300,045
  344,737
  392,675
  443,781
  497,983
  555,213
  615,414
  678,547
  744,588
  813,534
  885,398
  960,216
  1,038,044
  1,118,956
  1,203,048
Debt-to-equity ratio
  1.036
  1.340
  1.530
  1.640
  1.720
  1.760
  1.800
  1.820
  1.830
  1.840
  1.850
  1.860
  1.860
  1.860
  1.870
  1.870
  1.870
  1.870
  1.870
  1.870
  1.880
  1.880
  1.880
  1.880
  1.880
  1.880
  1.880
  1.880
  1.880
  1.880
  1.880
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
  285
  517
  839
  1,274
  1,842
  2,567
  3,468
  4,565
  5,872
  7,404
  9,170
  11,175
  13,423
  15,913
  18,646
  21,615
  24,818
  28,249
  31,902
  35,772
  39,854
  44,145
  48,642
  53,343
  58,250
  63,362
  68,684
  74,218
  79,971
  85,950
Depreciation, amort., depletion, $m
  110
  172
  263
  390
  561
  786
  1,073
  1,431
  1,867
  2,390
  3,004
  3,712
  4,520
  5,428
  6,436
  7,544
  8,751
  10,054
  11,452
  12,943
  14,523
  16,192
  17,948
  19,789
  21,715
  23,726
  25,822
  28,004
  30,274
  32,633
  35,086
Funds from operations, $m
  298
  457
  780
  1,229
  1,835
  2,628
  3,640
  4,899
  6,432
  8,262
  10,408
  12,882
  15,695
  18,850
  22,349
  26,189
  30,366
  34,872
  39,701
  44,844
  50,295
  56,046
  62,093
  68,431
  75,059
  81,976
  89,184
  96,687
  104,492
  112,605
  121,036
Change in working capital, $m
  36
  18
  25
  35
  47
  62
  80
  99
  121
  145
  170
  197
  224
  252
  280
  307
  335
  362
  388
  414
  439
  463
  487
  511
  534
  558
  581
  605
  630
  655
  680
Cash from operations, $m
  262
  440
  755
  1,194
  1,787
  2,566
  3,560
  4,799
  6,311
  8,117
  10,238
  12,685
  15,471
  18,599
  22,070
  25,882
  30,031
  34,511
  39,313
  44,431
  49,856
  55,583
  61,606
  67,920
  74,524
  81,418
  88,603
  96,082
  103,862
  111,950
  120,356
Maintenance CAPEX, $m
  0
  -108
  -172
  -263
  -390
  -561
  -785
  -1,072
  -1,430
  -1,867
  -2,389
  -3,003
  -3,712
  -4,520
  -5,428
  -6,436
  -7,544
  -8,751
  -10,054
  -11,452
  -12,943
  -14,523
  -16,192
  -17,948
  -19,789
  -21,715
  -23,726
  -25,822
  -28,004
  -30,274
  -32,633
New CAPEX, $m
  -278
  -405
  -583
  -812
  -1,095
  -1,437
  -1,836
  -2,290
  -2,795
  -3,344
  -3,928
  -4,540
  -5,169
  -5,809
  -6,452
  -7,091
  -7,722
  -8,342
  -8,948
  -9,539
  -10,117
  -10,682
  -11,237
  -11,784
  -12,327
  -12,869
  -13,414
  -13,965
  -14,527
  -15,102
  -15,696
Cash from investing activities, $m
  -245
  -513
  -755
  -1,075
  -1,485
  -1,998
  -2,621
  -3,362
  -4,225
  -5,211
  -6,317
  -7,543
  -8,881
  -10,329
  -11,880
  -13,527
  -15,266
  -17,093
  -19,002
  -20,991
  -23,060
  -25,205
  -27,429
  -29,732
  -32,116
  -34,584
  -37,140
  -39,787
  -42,531
  -45,376
  -48,329
Free cash flow, $m
  17
  -74
  0
  120
  302
  568
  939
  1,437
  2,086
  2,907
  3,920
  5,143
  6,589
  8,269
  10,190
  12,355
  14,765
  17,418
  20,311
  23,440
  26,797
  30,378
  34,177
  38,188
  42,408
  46,834
  51,463
  56,295
  61,331
  66,574
  72,026
Issuance/(repayment) of debt, $m
  -135
  1,421
  2,040
  2,839
  3,832
  5,027
  6,424
  8,013
  9,779
  11,698
  13,743
  15,882
  18,085
  20,324
  22,573
  24,809
  27,017
  29,184
  31,303
  33,373
  35,394
  37,371
  39,312
  41,226
  43,125
  45,021
  46,927
  48,856
  50,821
  52,836
  54,912
Issuance/(repurchase) of shares, $m
  214
  469
  567
  670
  763
  829
  847
  790
  632
  344
  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
  1,890
  2,607
  3,509
  4,595
  5,856
  7,271
  8,803
  10,411
  12,042
  13,743
  15,882
  18,085
  20,324
  22,573
  24,809
  27,017
  29,184
  31,303
  33,373
  35,394
  37,371
  39,312
  41,226
  43,125
  45,021
  46,927
  48,856
  50,821
  52,836
  54,912
Total cash flow (excl. dividends), $m
  96
  1,815
  2,607
  3,629
  4,898
  6,424
  8,209
  10,240
  12,497
  14,949
  17,663
  21,025
  24,674
  28,593
  32,762
  37,164
  41,782
  46,602
  51,615
  56,812
  62,191
  67,749
  73,488
  79,414
  85,534
  91,855
  98,390
  105,152
  112,153
  119,409
  126,938
Retained Cash Flow (-), $m
  -251
  -754
  -1,084
  -1,509
  -2,036
  -2,671
  -3,413
  -4,258
  -5,197
  -6,216
  -7,303
  -8,439
  -9,610
  -10,800
  -11,995
  -13,183
  -14,357
  -15,508
  -16,634
  -17,734
  -18,808
  -19,859
  -20,890
  -21,907
  -22,916
  -23,924
  -24,937
  -25,962
  -27,006
  -28,077
  -29,180
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
 
  1,061
  1,523
  2,120
  2,861
  3,753
  4,795
  5,982
  7,300
  8,733
  10,360
  12,585
  15,064
  17,793
  20,767
  23,981
  27,425
  31,094
  34,980
  39,078
  43,383
  47,890
  52,598
  57,507
  62,617
  67,931
  73,454
  79,190
  85,147
  91,333
  97,758
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
 
  981
  1,291
  1,635
  1,991
  2,334
  2,639
  2,883
  3,047
  3,120
  3,128
  3,169
  3,119
  2,983
  2,775
  2,511
  2,210
  1,892
  1,576
  1,276
  1,004
  767
  569
  409
  285
  193
  126
  79
  48
  28
  16
Current shareholders' claim on cash, %
  100
  84.7
  74.5
  67.3
  62.2
  58.6
  56.1
  54.4
  53.5
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1
  53.1

South Jersey Industries, Inc. (SJI) is an energy services holding company. The Company provides a range of energy-related products and services, primarily through its subsidiaries. Its subsidiaries include South Jersey Gas Company (SJG), South Jersey Energy Company (SJE), South Jersey Resources Group, LLC (SJRG), South Jersey Exploration, LLC (SJEX), Marina Energy, LLC (Marina), South Jersey Energy Service Plus, LLC (SJESP) and SJI Midstream, LLC (Midstream). Its segments include Gas utility operations (SJG), which consist primarily of natural gas distribution; Wholesale energy operations, which include the activities of SJRG and SJEX; SJE, which is involved in both retail gas and retail electric activities; On-Site energy production, which consists of Marina's thermal energy facility; Appliance service operations, which include SJESP, and Corporate and Services segment, which includes the activities of Midstream.

FINANCIAL RATIOS  of  South Jersey Industries (SJI)

Valuation Ratios
P/E Ratio 21.8
Price to Sales 2.5
Price to Book 2
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow -162.2
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 58.4% 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 6.4 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 79.641 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 $2.6 billion.

RELATED COMPANIES Price Int.Val. Rating
NJR New Jersey Res 44.75 37.58  hold
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CPK Chesapeake Uti 81.55 133.66  str.buy
NFG National Fuel 58.05 4.45  str.sell
NI NiSource 27.08 15.01  sell
CNP CenterPoint En 29.00 153.02  str.buy

COMPANY NEWS

▶ South Jersey Industries posts 3Q loss   [05:39AM  Associated Press]
▶ South Jersey Industries, Inc. to Host Earnings Call   [Nov-03-17 08:50AM  ACCESSWIRE]
▶ South Jersey Industries posts 2Q loss   [Aug-05-17 01:13AM  Associated Press]
▶ 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]
Financial statements 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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