Morningstar | New Jersey Resources Benefits From Exceptional Customer Growth
We are reaffirming our $32 fair value estimate for New Jersey Resources after the company reported an $8 million loss on an adjusted basis in the fiscal third quarter, down from a $17.4 million gain in last year's third quarter. We are reaffirming our narrow moat and stable moat trend ratings.Management raised its fiscal 2018 net financial earnings per share guidance range to $2.60-$2.70, up $0.10 per share. We already anticipated earnings would top management's previous guidance range, so we are reaffirming our outlook.
The volatile Energy Services business has provided the bulk of the year-to-date earnings uplift due to abnormally favorable weather, although that segment was an earnings drag in the third quarter. We continue to assume Energy Services' earnings normalize next year, leading to lower consolidated earnings but no material valuation impact. We expect the segment to contribute 15% of consolidated earnings on a normalized basis, not the 25%-30% it could contribute this year.
The key long-term earnings and valuation upside is from continued growth at NJR's New Jersey distribution utility, which  supports our 7% average annualized growth outlook through 2021. NJR h as added nearly 7,000 new distribution customers through the first nine months, a faster growth rate than last year. This growth offers immediate earnings and cash flow upside as well as long-term opportunities to invest in new infrastructure.
We continue to assume NJR receives regulatory approval for its planned midstream investments. With most of its planned projects set to wind down in 2021, we await thoughts from management regarding the next leg of potential growth investment outside of the distribution utility. New large projects could lead us to increase our fair value estimate.
New Jersey Resources is an energy services holding company whose principal business is the distribution of natural gas through a regulated utility, providing other retail and wholesale energy services to customers and investing in clean energy projects and midstream assets. The company's segments are: Natural Gas Distribution, which consists of regulated natural gas services, off-system sales, capacity and storage management operations; Clean Energy Ventures, which consists of capital investments in clean energy projects; Energy Services, which consists of unregulated wholesale and retail energy operations; and Midstream, which consists of investments in the midstream natural gas market.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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