Intrinsic value of NewJersey Resources Corporation - NJR

Previous Close

$49.71

  Intrinsic Value

$3.93

stock screener

  Rating & Target

str. sell

-92%

Previous close

$49.71

 
Intrinsic value

$3.93

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of NJR 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 0001), $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 4.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  15.10
  14.09
  13.18
  12.36
  11.63
  10.96
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.52
  6.36
  6.23
  6.11
  5.99
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
Revenue, $m
  3,355
  3,828
  4,332
  4,868
  5,434
  6,030
  6,655
  7,309
  7,993
  8,705
  9,447
  10,218
  11,021
  11,855
  12,721
  13,622
  14,558
  15,531
  16,543
  17,596
  18,692
  19,833
  21,022
  22,261
  23,554
  24,902
  26,310
  27,780
  29,316
  30,921
Variable operating expenses, $m
  3,107
  3,544
  4,011
  4,506
  5,030
  5,581
  6,160
  6,765
  7,397
  8,056
  8,740
  9,454
  10,197
  10,968
  11,770
  12,603
  13,469
  14,370
  15,306
  16,280
  17,294
  18,350
  19,450
  20,596
  21,792
  23,040
  24,342
  25,702
  27,123
  28,608
Fixed operating expenses, $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
Total operating expenses, $m
  3,107
  3,544
  4,011
  4,506
  5,030
  5,581
  6,160
  6,765
  7,397
  8,056
  8,740
  9,454
  10,197
  10,968
  11,770
  12,603
  13,469
  14,370
  15,306
  16,280
  17,294
  18,350
  19,450
  20,596
  21,792
  23,040
  24,342
  25,702
  27,123
  28,608
Operating income, $m
  249
  284
  322
  362
  404
  449
  495
  544
  595
  649
  707
  764
  824
  887
  951
  1,019
  1,089
  1,162
  1,237
  1,316
  1,398
  1,483
  1,572
  1,665
  1,762
  1,862
  1,968
  2,078
  2,192
  2,313
EBITDA, $m
  352
  402
  455
  511
  571
  633
  699
  768
  840
  914
  992
  1,074
  1,158
  1,245
  1,336
  1,431
  1,529
  1,632
  1,738
  1,849
  1,964
  2,084
  2,208
  2,339
  2,474
  2,616
  2,764
  2,918
  3,080
  3,248
Interest expense (income), $m
  44
  79
  101
  125
  150
  178
  206
  236
  268
  301
  335
  371
  409
  448
  489
  531
  574
  620
  667
  716
  768
  821
  876
  934
  994
  1,057
  1,122
  1,190
  1,261
  1,336
  1,413
Earnings before tax, $m
  170
  183
  197
  211
  227
  243
  259
  276
  295
  313
  335
  355
  376
  398
  421
  444
  469
  494
  521
  548
  577
  607
  638
  671
  705
  740
  778
  816
  857
  899
Tax expense, $m
  46
  49
  53
  57
  61
  65
  70
  75
  80
  85
  90
  96
  102
  107
  114
  120
  127
  133
  141
  148
  156
  164
  172
  181
  190
  200
  210
  220
  231
  243
Net income, $m
  124
  134
  144
  154
  165
  177
  189
  202
  215
  229
  245
  259
  275
  291
  307
  324
  342
  361
  380
  400
  421
  443
  466
  490
  515
  541
  568
  596
  626
  657

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  4,773
  5,445
  6,163
  6,925
  7,730
  8,577
  9,467
  10,397
  11,369
  12,382
  13,438
  14,535
  15,677
  16,863
  18,096
  19,377
  20,709
  22,093
  23,532
  25,030
  26,589
  28,212
  29,903
  31,666
  33,505
  35,423
  37,425
  39,516
  41,701
  43,984
Adjusted assets (=assets-cash), $m
  4,773
  5,445
  6,163
  6,925
  7,730
  8,577
  9,467
  10,397
  11,369
  12,382
  13,438
  14,535
  15,677
  16,863
  18,096
  19,377
  20,709
  22,093
  23,532
  25,030
  26,589
  28,212
  29,903
  31,666
  33,505
  35,423
  37,425
  39,516
  41,701
  43,984
Revenue / Adjusted assets
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
  0.703
Average production assets, $m
  3,046
  3,476
  3,934
  4,420
  4,934
  5,475
  6,043
  6,637
  7,257
  7,904
  8,578
  9,278
  10,007
  10,764
  11,551
  12,369
  13,219
  14,102
  15,021
  15,977
  16,972
  18,009
  19,088
  20,213
  21,387
  22,611
  23,889
  25,224
  26,619
  28,076
Working capital, $m
  339
  387
  438
  492
  549
  609
  672
  738
  807
  879
  954
  1,032
  1,113
  1,197
  1,285
  1,376
  1,470
  1,569
  1,671
  1,777
  1,888
  2,003
  2,123
  2,248
  2,379
  2,515
  2,657
  2,806
  2,961
  3,123
Total debt, $m
  1,872
  2,314
  2,787
  3,288
  3,818
  4,375
  4,960
  5,573
  6,212
  6,879
  7,573
  8,296
  9,047
  9,827
  10,639
  11,482
  12,358
  13,268
  14,216
  15,201
  16,227
  17,295
  18,408
  19,568
  20,777
  22,040
  23,357
  24,733
  26,171
  27,673
Total liabilities, $m
  3,140
  3,583
  4,055
  4,556
  5,086
  5,644
  6,229
  6,841
  7,481
  8,148
  8,842
  9,564
  10,315
  11,096
  11,907
  12,750
  13,626
  14,537
  15,484
  16,470
  17,495
  18,564
  19,676
  20,836
  22,046
  23,308
  24,626
  26,002
  27,439
  28,942
Total equity, $m
  1,632
  1,862
  2,108
  2,368
  2,644
  2,933
  3,238
  3,556
  3,888
  4,235
  4,596
  4,971
  5,361
  5,767
  6,189
  6,627
  7,082
  7,556
  8,048
  8,560
  9,093
  9,649
  10,227
  10,830
  11,459
  12,115
  12,799
  13,515
  14,262
  15,043
Total liabilities and equity, $m
  4,772
  5,445
  6,163
  6,924
  7,730
  8,577
  9,467
  10,397
  11,369
  12,383
  13,438
  14,535
  15,676
  16,863
  18,096
  19,377
  20,708
  22,093
  23,532
  25,030
  26,588
  28,213
  29,903
  31,666
  33,505
  35,423
  37,425
  39,517
  41,701
  43,985
Debt-to-equity ratio
  1.150
  1.240
  1.320
  1.390
  1.440
  1.490
  1.530
  1.570
  1.600
  1.620
  1.650
  1.670
  1.690
  1.700
  1.720
  1.730
  1.740
  1.760
  1.770
  1.780
  1.780
  1.790
  1.800
  1.810
  1.810
  1.820
  1.820
  1.830
  1.840
  1.840
Adjusted equity ratio
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342
  0.342

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  124
  134
  144
  154
  165
  177
  189
  202
  215
  229
  245
  259
  275
  291
  307
  324
  342
  361
  380
  400
  421
  443
  466
  490
  515
  541
  568
  596
  626
  657
Depreciation, amort., depletion, $m
  104
  118
  133
  150
  167
  185
  204
  224
  244
  266
  286
  309
  334
  359
  385
  412
  441
  470
  501
  533
  566
  600
  636
  674
  713
  754
  796
  841
  887
  936
Funds from operations, $m
  228
  252
  277
  304
  332
  362
  393
  425
  459
  494
  530
  569
  608
  649
  692
  737
  783
  831
  881
  933
  987
  1,043
  1,102
  1,164
  1,227
  1,294
  1,364
  1,437
  1,513
  1,592
Change in working capital, $m
  44
  48
  51
  54
  57
  60
  63
  66
  69
  72
  75
  78
  81
  84
  88
  91
  95
  98
  102
  106
  111
  115
  120
  125
  131
  136
  142
  148
  155
  162
Cash from operations, $m
  183
  204
  226
  250
  275
  302
  330
  359
  390
  423
  456
  491
  527
  565
  605
  646
  688
  733
  779
  827
  876
  928
  982
  1,038
  1,097
  1,158
  1,222
  1,288
  1,358
  1,430
Maintenance CAPEX, $m
  -88
  -102
  -116
  -131
  -147
  -164
  -183
  -201
  -221
  -242
  -263
  -286
  -309
  -334
  -359
  -385
  -412
  -441
  -470
  -501
  -533
  -566
  -600
  -636
  -674
  -713
  -754
  -796
  -841
  -887
New CAPEX, $m
  -400
  -429
  -458
  -486
  -514
  -541
  -568
  -594
  -620
  -647
  -674
  -701
  -729
  -757
  -787
  -818
  -850
  -884
  -919
  -956
  -995
  -1,036
  -1,080
  -1,125
  -1,174
  -1,224
  -1,278
  -1,335
  -1,395
  -1,458
Cash from investing activities, $m
  -488
  -531
  -574
  -617
  -661
  -705
  -751
  -795
  -841
  -889
  -937
  -987
  -1,038
  -1,091
  -1,146
  -1,203
  -1,262
  -1,325
  -1,389
  -1,457
  -1,528
  -1,602
  -1,680
  -1,761
  -1,848
  -1,937
  -2,032
  -2,131
  -2,236
  -2,345
Free cash flow, $m
  -305
  -327
  -348
  -368
  -386
  -404
  -420
  -436
  -451
  -466
  -481
  -496
  -511
  -526
  -541
  -557
  -574
  -592
  -610
  -630
  -651
  -674
  -698
  -723
  -750
  -779
  -810
  -843
  -878
  -915
Issuance/(repayment) of debt, $m
  416
  442
  472
  501
  530
  558
  585
  612
  640
  667
  694
  722
  751
  781
  811
  843
  876
  911
  947
  985
  1,026
  1,068
  1,113
  1,160
  1,210
  1,262
  1,318
  1,376
  1,438
  1,502
Issuance/(repurchase) of shares, $m
  89
  96
  102
  106
  110
  113
  115
  116
  117
  118
  116
  116
  116
  115
  114
  114
  113
  113
  112
  112
  112
  112
  112
  113
  114
  115
  117
  119
  122
  124
Cash from financing (excl. dividends), $m  
  505
  538
  574
  607
  640
  671
  700
  728
  757
  785
  810
  838
  867
  896
  925
  957
  989
  1,024
  1,059
  1,097
  1,138
  1,180
  1,225
  1,273
  1,324
  1,377
  1,435
  1,495
  1,560
  1,626
Total cash flow (excl. dividends), $m
  200
  212
  226
  240
  253
  267
  280
  293
  305
  318
  329
  342
  356
  370
  385
  400
  415
  432
  449
  467
  486
  506
  528
  550
  573
  598
  625
  652
  682
  712
Retained Cash Flow (-), $m
  -213
  -230
  -245
  -261
  -275
  -290
  -304
  -318
  -332
  -347
  -361
  -375
  -390
  -406
  -422
  -438
  -455
  -473
  -492
  -512
  -533
  -555
  -578
  -603
  -629
  -656
  -685
  -715
  -747
  -781
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
  -13
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -32
  -33
  -34
  -36
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
Discount rate, %
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
  -12
  -16
  -15
  -15
  -14
  -14
  -13
  -12
  -11
  -10
  -10
  -8
  -7
  -6
  -5
  -4
  -3
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  98.0
  96.2
  94.5
  93.0
  91.7
  90.4
  89.3
  88.3
  87.4
  86.5
  85.8
  85.1
  84.4
  83.9
  83.3
  82.8
  82.4
  82.0
  81.6
  81.2
  80.9
  80.6
  80.3
  80.0
  79.7
  79.4
  79.2
  79.0
  78.7
  78.5

New Jersey Resources Corporation is an energy services holding company. The Company's business is the distribution of natural gas through a regulated utility, which provides other retail and wholesale energy services to customers and investing in clean energy projects and midstream assets. It operates in four business segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services and Midstream. The Natural Gas Distribution segment consists of regulated natural gas services, off-system sales, capacity and storage management operations. The Energy Services segment consists of unregulated wholesale energy operations. The Clean Energy Ventures segment consists of capital investments in clean energy projects. The Midstream segment consists of investments in the midstream natural gas market, such as natural gas transportation and storage facilities. The Home Services and Other operations consist of heating, cooling and water appliance sales and installations, among others.

FINANCIAL RATIOS  of  NewJersey Resources Corporation (NJR)

Valuation Ratios
P/E Ratio 32.6
Price to Sales 1.9
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 17.4
Price to Free Cash Flow -89.6
Growth Rates
Sales Growth Rate 20.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.5%
Cap. Spend. - 3 Yr. Gr. Rate 2.2%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 80.6%
Total Debt to Equity 115.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.4%
Ret/ On Assets - 3 Yr. Avg. 5%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 6.8%
Return On Equity 11%
Return On Equity - 3 Yr. Avg. 13.4%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 11.6%
EBITDA Margin - 3 Yr. Avg. 12.1%
Operating Margin 7.4%
Oper. Margin - 3 Yr. Avg. 8.5%
Pre-Tax Margin 6%
Pre-Tax Margin - 3 Yr. Avg. 7.4%
Net Profit Margin 5.8%
Net Profit Margin - 3 Yr. Avg. 6.5%
Effective Tax Rate 13.9%
Eff/ Tax Rate - 3 Yr. Avg. 18.8%
Payout Ratio 66.7%

NJR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NJR stock intrinsic value calculation we used $2915 million for the last fiscal year's total revenue generated by NewJersey Resources Corporation. The default revenue input number comes from 0001 income statement of NewJersey Resources Corporation. 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 NJR stock valuation model: a) initial revenue growth rate of 15.1% 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 7.1%, whose default value for NJR is calculated based on our internal credit rating of NewJersey Resources Corporation, 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 NewJersey Resources Corporation.
    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 NJR stock the variable cost ratio is equal to 92.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NJR 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 5.4% for NewJersey Resources Corporation.

Corporate tax rate of 27% is the nominal tax rate for NewJersey Resources Corporation. 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 NJR 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 NJR are equal to 90.8%.

Life of production assets of 31.1 years is the average useful life of capital assets used in NewJersey Resources Corporation 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 NJR is equal to 10.1%. 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 - $1418.978 million for NewJersey Resources Corporation - 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 88.867 million for NewJersey Resources Corporation 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 NewJersey Resources Corporation at the current share price and the inputted number of shares is $4.4 billion.

RELATED COMPANIES Price Int.Val. Rating
CPK Chesapeake Uti 92.19 15.81  str.sell
NI NiSource, Inc 28.61 10.34  str.sell
CNP CenterPoint En 30.72 27.99  hold

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.