South Jersey Industries, Inc. (SJI) Corrections Be Seen As An Opportunity

South Jersey Industries, Inc. (NYSE:SJI) is now being followed by Wells Fargo, as they initiated the stock at Market Perform on October 30. Analysts at Williams Capital Group, maintained the company shares at Buy on October 29 but switched target price from $39 to $36. The stock won favor of JP Morgan analysts who expressed their confidence in it using an upgrade from Neutral to Overweight on September 11. BofA/Merrill, released new analyst coverage on July 30, calling the stock is Neutral.

SJI stock dropped -0.41% in recent trade and currently has a stock-market value of $2.86B. The shares finished at $31.21, after trading as low as $31 earlier in the session. It hit an intraday high Thursday at $31.48. Trading activity significantly improved as the volume at ready counter increased to 924,719 shares versus 797,845 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 692,304 shares. The stock is now 19.76% above against its bear-market low of $26.06 on December 26, 2018. It has retreated -17.65% since it’s 52-week high of $36.72 reached in October. Now the market price is up 12.35% on the year and up 12.27% YTD.

Wall Street’s most bullish South Jersey Industries, Inc. (NYSE:SJI) analysts are predicting the share price to blow past $36 per share during the next 12 months. The current median share price forecast by them is $32.5, suggesting that the stock could increase 4.13% in that time frame. The average price target of $32.67 calls for a nearly 4.68% increase in the stock price.

South Jersey Industries, Inc. (SJI)’s 50 day simple moving average (SMA 50) price is $29.98 and its 200-day simple moving average (SMA 200) price is $32.01. The company’s stock currently has a total float of 91.68M shares. Its weekly volatility is hovering around 1.48% and felt 2.09% volatility in price over a month. On the upside, the share price will test short term resistance at around $31.46. On a downside, the stock is likely to find some support, which begins at $30.98. The failure to get near-term support could push it to $30.75.

When looking at valuations, South Jersey Industries, Inc. (SJI) has a pricey P/E of 117.33x as compared to industry average of 16.25x. Moreover, it trades for 19.27 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 2.11x price/book and 1.74x price/sales. Compared to others, South Jersey Industries, Inc. is in a different league with regards to profitability, having net margins of 1.1%. To put some perspective around this, the industry’s average net margin is 7.26%. SJI’s ROE is 1.4%, which is also considerably worse than the industry’s ROE of 5.86%. It’s also not liquid in the near term, with a current ratio of 0.4. The stock has a debt/capital of 2.46.

Shares of SJI have dropped -2.2% since the company’s most recent earnings report. Over the past 12 fiscal quarters, South Jersey Industries, Inc. (NYSE:SJI) has topped consensus earnings estimates in 7 quarters (58%), missed earnings in 5 quarters (41%), whereas at 0 occasion EPS met analyst expectations. SJI last reported earnings that receded expectations. The company raked in $0.39 per share, -97.88% change on the same period last year. That was worse than consensus for $0.48. Revenue for the recent quarter stood at $589.58 million, up 71% on last year and above the $419.34 million predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $518.21 million to $599 million, which should be compared with $460 million generated last year. EPS is seen in a range of $0.79 to $1.07, against the $0.87 reported a year ago.