Investment Thesis
NJR demonstrates strong fundamental health with net income growing 15.8% YoY while generating robust free cash flow of $289.3M, indicating profitable operational leverage. The company maintains healthy interest coverage of 7.6x and a solid operating margin of 44.4%, supporting financial stability despite leverage of 1.24x debt-to-equity, which is reasonable for the regulated utility sector.
Strengths
- Earnings growth (15.8% YoY) exceeding revenue growth (9.9% YoY) indicates improving operational efficiency and margin expansion
- Exceptional free cash flow generation of $289.3M with 26.7% FCF margin demonstrates cash conversion quality and capacity for dividends/debt service
- Strong interest coverage ratio of 7.6x combined with solid operating margin of 44.4% shows financial resilience and debt serviceability
Risks
- Current ratio of 0.94x below 1.0 indicates potential near-term liquidity pressure, though typical for utilities with stable contractual cash flows
- Debt-to-equity ratio of 1.24x represents elevated leverage; susceptibility to rising interest rates or credit market stress
- Regulated utility sector subject to regulatory and political risks affecting rate structures and capital recovery
Key Metrics to Watch
- Free Cash Flow sustainability and growth trajectory
- Debt-to-equity ratio and interest coverage trends
- Operating margin maintenance during revenue cycles
- Capital expenditure requirements and funding sources
Financial Metrics
Revenue
1.1B
Net Income
341.4M
EPS (Diluted)
$3.37
Free Cash Flow
289.3M
Total Assets
7.9B
Cash
125.3M
Profitability Ratios
Gross Margin
N/A
Operating Margin
44.4%
Net Margin
31.5%
ROE
12.9%
ROA
4.3%
FCF Margin
26.7%
Balance Sheet & Liquidity
Current Ratio
0.94x
Quick Ratio
0.94x
Debt/Equity
1.24x
Debt/Assets
0.0%
Interest Coverage
7.61x
Long-term Debt
3.3B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T20:41:38.060135 |
Data as of: 2026-03-31 |
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