Advertisement

Revenue Miss: South Jersey Industries, Inc. Fell 11% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

Last week saw the newest first-quarter earnings release from South Jersey Industries, Inc. (NYSE:SJI), an important milestone in the company's journey to build a stronger business. Revenues were US$534m, 11% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of US$1.09 being in line with what the analysts anticipated. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for South Jersey Industries

NYSE:SJI Past and Future Earnings May 8th 2020
NYSE:SJI Past and Future Earnings May 8th 2020

Following the latest results, South Jersey Industries' six analysts are now forecasting revenues of US$1.60b in 2020. This would be a credible 4.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 47% to US$1.47. Before this earnings report, the analysts had been forecasting revenues of US$1.59b and earnings per share (EPS) of US$1.52 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at US$30.38, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on South Jersey Industries, with the most bullish analyst valuing it at US$37.00 and the most bearish at US$23.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that South Jersey Industries' revenue growth is expected to slow, with forecast 4.6% increase next year well below the historical 15%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.4% next year. So it's pretty clear that, while South Jersey Industries' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$30.38, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for South Jersey Industries going out to 2022, and you can see them free on our platform here..

Before you take the next step you should know about the 4 warning signs for South Jersey Industries (1 is a bit unpleasant!) that we have uncovered.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.