NEW JERSEY RESOURCES CORP (NJR) stock intrinsic value fair value estimate & owner earnings analysis

New Jersey Resources owns New Jersey Natural Gas, the regulated gas utility serving central and coastal New Jersey, plus Clean Energy Ventures (commercial solar), Energy Services (wholesale gas trading and storage/transport capacity) and Storage & Transportation (the Leaf River storage cavern in Mississippi, the Adelphia Gateway pipeline in Pennsylvania and a 50% stake in Steckman Ridge storage). In fiscal 2025 the company's own segment earnings were about 65% utility, 18% solar, 10% trading and 6% storage and pipelines. Reported profit is noisy because gas contracts are marked to market before they settle, so this analysis uses cash instead: cash from operations, excluding working-capital swings, less stock compensation and less the spending needed to keep existing assets whole. For a utility we treat depreciation plus the cash cost of removing retired pipe as that "keep-whole" spending, and treat the rest of the roughly $570 million to $700 million a year of construction as growth. A revenue-based split does not work here because most revenue is passed-through gas cost. On that basis cash earnings were $2.44 per share in fiscal 2025 and $2.59 in 2024 (down 6.0%). Adding back the cash interest paid gives the cash the business generates before its lenders: $3.73 per share in fiscal 2025 and $3.80 in 2024 (down 1.9%). What we count. We use the middle value of fiscal 2023 to 2025 ($3.73) as the starting level, because the solar build-out and the Adelphia pipeline are in the numbers and the November 2024 rate order ($157.0 million increase, 9.6% allowed return on equity, 54% equity, 7.08% return on rate base) is almost entirely in the latest year. We exclude the $58.2 million gain on selling solar assets and the unrealized trading gain. Nine-month fiscal 2026 results through June 2026 (cash from operations $577.8 million vs $385.2 million; net income $351.1 million vs $320.6 million) are consistent with that level, so we do not move it. We deduct about $0.65 per share of deferred income taxes that the reported cash flow includes ($30.5 million, $85.7 million and $77.0 million in fiscal 2023 to 2025). That cash arrives only while the company keeps building faster than it depreciates, and we give no credit for that future building, so we do not credit its tax float either; keeping it would add roughly $10 to $11 per share to each case. The starting level is therefore $3.08 per share, about $311 million: roughly $202 million from the utility, $58 million solar, $33 million trading and $18 million storage and pipelines. Growth. The latest year's change was -1.9%; the base case assumes 0% for the existing business in year one, because the decline came from trading (about $111.5 million to $34.9 million of segment earnings) while the utility rose from $133.4 million to $213.5 million, and trading is already held at its low. Including the construction credit, year one is about 4% above the starting level, for one named reason: $395.9 million of utility construction already paid for and under way at September 30, 2025. NJNG recovers such projects through annual infrastructure filings (for example $41.2 million of spending produced a $4.7 million revenue increase in October 2024, and $33.1 million has been requested for a $4.0 million increase), which after taxes and depreciation leaves about 6.5% of cost, or $25.7 million a year (half in year one). We credit nothing else. New customers, new pipe and new solar are not counted because they require borrowing and share issuance not yet done (the share count has risen from 86.7 million to 101.8 million since 2016). $151.4 million of non-utility construction is also left out because we cannot evidence its return. Cases. Each is one story, then valued in two steps: the business, then what it owes. Base: the utility's $202 million plus $25.7 million from the construction under way continues indefinitely, since NJNG is a licensed monopoly that has recovered its costs in rate cases; trading stays at its fiscal 2025 level for 15 years, storage and pipelines for 25 years, solar for 20 years (the fleet's remaining life is a judgement; we could not confirm its average age). About $324 million in year one, then $337 million, falling to $228 million as those pieces end. The business is worth $4,999 million ($49.11 per share), it owes $34.55 per share, leaving $14.56. Bear: the utility earns 7.5% less after a lower allowed return or disallowed costs; years 2 and 3 repeat the company's own 2018 to 2019 slump, when before-interest cash fell 30% from $2.26 to $1.58 per share and stayed near $1.60 in 2020 (trading halves again, solar and storage 30% lower, the utility 10% lower, the last echoing fiscal 2021 when bad-debt charges reached $19.0 million); trading is half of today's level for 8 years then gone; storage and pipelines end after 10 years; solar fades to zero over 12 years because the 2025 tax law ends solar credits for projects not in service by December 31, 2027 (unless construction began before July 4, 2026). Cash is about $291 million in year one and about $245 million in the slump, versus roughly $150 million a year of interest, so this case can carry its debt. Business $3,941 million ($38.72 per share), owes $34.55, leaving $4.17. Bull: the company's own levers work: trading returns to its 2023 to 2025 average (about double today's level) for 15 years, and solar and storage last 30 years. Business $5,486 million ($53.90 per share), owes $34.55, leaving about $19.34 after rounding. Debt. At June 30, 2026 the company had $3,200 million of long-term debt, $283 million falling due within a year (including $100 million at the holding company) and $220 million of short-term borrowings: about $3,717 million before issuance costs. We understand this to include the solar sale-leaseback obligations, which the company reports as financing. We reduce it by $200 million because about $873 million of NJNG first mortgage bonds carry coupons of 2.45% to 4.61% (average near 3.6%); the figure assumes about 15 years remaining and we did not confirm individual maturities. Net debt used: $3,517 million, or $34.55 per share. Cash of $34 million is treated as operating cash. Interest paid was $130.3 million in fiscal 2025 (net of capitalized interest). Judgement for the margin-of-safety price. We are reasonably sure of the utility's earnings (rate-regulated, 65% of segment earnings) and much less sure of trading, which ranged from $34.9 million to $111.5 million in three years, and of solar after the credit cutoff. The worst plausible outcome is a rate case that trims the allowed return together with a trading slump while about $500 million of debt falls due or must be rolled within a year; the first mortgage bonds and franchise survive that, but equity is thin because debt is about 70% of the business value in the base case and 89% in the bear case, so each $10 million a year of lasting cash is worth $1.64 per share and each $100 million of debt $0.98. If we are wrong about solar or trading, or about the remaining life of the solar fleet, value moves by a few dollars; if we are wrong about the utility's cash flow, by much more. Without the construction credit the base case would be $10.46. The dividend ($1.92 a year at the current $0.48 quarterly rate) is slightly more than the roughly $1.77 per share of no-growth cash left after interest, so the payout depends on continued borrowing and share issuance. The price assumes a holding period of up to ten years. From $7.00, the base case implies about $1.65 to $1.77 a year to a holder plus roughly $10 of equity at year ten, about a 26% annual return; in the bear case the cash returned would recover the $7 in about seven years (roughly 9% a year); the bull case implies more than 30%. $7.00 is the price at which the base case implies clearly more than a 20% annual return while the bear case still implies the $7 is recovered with a gain. Open points. Cash flow shows no separate stock-compensation add-back, so deducting it may slightly understate cash earnings (up to $0.17 per share). The June 2026 quarterly report's narrative was not available to us, so we relied on its structured figures, and fiscal 2026 annual results are not yet filed. Our earlier published figures were prepared on a different basis and are not comparable.