Back to top

Analyst Blog

NiSource Inc. (NI - Analyst Report) announced that its unit Columbia Gas Transmission, under Gas Transmission and Storage (“NGT&S”) segment, achieved a customer settlement to upgrade its natural gas pipeline infrastructure. Today, the company filed this petition with Federal Energy Regulatory Commission.  

Per the settlement, NiSource plans to replace 1,000 miles of its existing interstate transmission pipelines, upgrade natural gas compression systems and increase in line checking capacities. This settlement also includes a customer base rate decline and an investment recovery contract.

This project is under a program with an initial span of five years. This program also has an option of further extension. The expected cost of this Columbia modernization program will be approximately $4 billion. Under this program, the company will invest annually $300 million on system improvements.

This infrastructure modernization program enables NiSource to provide uninterrupted service to its customers while strengthening its system competence and boosting environmental performance. These factors will subsequently improve the company’s customer reliability and public safety. In addition, the petition for reducing base rate, if approved will trim down pressure on its customers and this project will also create approximately 7,000 direct jobs.

We believe that NiSource’s strong financial position encourages it to follow steady infrastructure development activities. In second-quarter 2012, the company’s net cash from operating activities were $771.8 million, up from $736 million in the year-ago quarter. The company ended the previous quarter with cash and cash equivalents of $52.8 million, significantly up from $11.5 million as of December 31, 2011.

In addition, NiSource’s continuous effort toward improving customer service will act as a positive catalyst for improving its financial performance in the future.

However, we are skeptical about volatility in commodity prices and stringent regulatory barriers, which may negatively impact the company’s forthcoming performance.

NiSource Inc. currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Merrillville, Indiana-based NiSource is an energy holding company, whose subsidiaries provide natural gas, electricity and other products and services in the U.S. The company competes with FirstEnergy Corporation (FE - Analyst Report).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%