The mix of a low ROE and high debt is unattractive. Investors should ponder on the company's performance if borrowing becomes difficult, as credit markets fluctuate. High quality firms usually have high ROE and low debt.
Despite lower revenue estimates for New Jersey Resources, analysts expect the business to outpace industry growth. The unchanged consensus price target suggests the new estimates haven't greatly affected the company's valuation.
Analysts' upgraded revenue forecasts indicate a bullish outlook on the company's prospects. They believe New Jersey Resources' growth rate will significantly outpace the industry's expected 5.0% annual growth.
The company's high P/E ratio and weak earnings outlook, coupled with slower than market growth, could potentially lead to a share price decline. Investors are warned about paying an unnecessary premium.