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Is it Wise to Hold NiSource (NI) in Your Portfolio For Now?

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Despite carrying a Zacks Rank #3 (Hold), NiSource Inc. (NI - Free Report) has seen earnings estimates for the current quarter rise from 61 cents to 62 cents in the last 30 days. This reflects optimism on the part of the analysts despite the company below par performance in fourth-quarter 2016.

NiSource will invest about $1.6–$1.8 billion in planned utility infrastructure investments annually through 2020 and has identified long-term infrastructure investments worth $30 billion, with over 90% of it allocated to regulated pipes and wires. Continued investments will allow the company to deliver its targeted earnings and dividend growth of 5–7% through 2020.

NiSource’s 100-mile Reynolds to Topeka Project transmission project and 65-mile Greentown to Reynolds transmission project are both under schedule.

With the current pulse in the U.S. market favoring clean energy, NiSource’s investment in this field is commendable. The company invested nearly $850M Flue Gas Desulfurization (FGD) Facilities and New Environmental Controls through 2016.

However, NiSource faces the risk of ageing infrastructure that needs regular replacement. Despite efforts made by NiSource to properly maintain its assets through inspection, scheduled maintenance and capital investment, the old machineries can falter, resulting in unplanned outages. These are likely to have an adverse impact on operations, impacting the utility revenues and margins.

Key Picks

A few favorably-placed stocks in the utility space include CenterPoint Energy, Inc. (CNP - Free Report) , ONE Gas, Inc. (OGS - Free Report) and Ameren Corporation (AEE - Free Report) .

CenterPoint Energy’s estimates for the current quarter increased from 34 cents to 36 cents in the last 30 days. The stock carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

ONE Gas, a Zacks Rank #2 stock, has seen estimates rising from $1.28 to $1.35 in the last 30 days for the current quarter.

Ameren Corp. has seen current-quarter estimates rising from 41 cents to 43 cents in the last 30 days. The stock carries a Zacks Rank #2.

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