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NiSource's (NI) Systematic Capital Investments Bode Well
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NiSource Inc.’s (NI - Free Report) consistent investments in strengthening its existing infrastructure and focus on clean energy are going to drive its performance. Also, its strong liquidity position is a tailwind.
The company’s long-term (three to five years) earnings growth is pegged at 5.60%.
What’s Driving the Stock?
NiSource is working on its long-term utility infrastructure modernization program. Over the 2021-2024 time frame, the company is going to invest in the range of $9.9-$10.5 billion, of which 60% is set aside for gas infrastructure, 20% for electric infrastructure and the rest for renewable generation.
The utility has a 100% regulated business model. More than 75% of NiSource’s capital expenditure starts providing returns in less than 18 months of investment. The company reiterated its 2021 net operating earnings per share guidance in the $1.28-$1.36 range and expects to see a 10-12% CAGR for the rate base through 2024. This will drive its earnings per share, witnessing a 7-9% CAGR in the 2021-2024 time frame.
Also, the company aims to reduce its greenhouse gas emissions by 90% within 2030 from the 2005 baseline and save more than $4 billion for customers of more than 30 years. The utility is planning to retire its 100% coal-generating sources by 2028 to replace the same with reliable and cleaner options at lower costs. Notably, NiSource has plans to invest in the $1.8-$2 billion band, primarily in 2022 and 2023, to meet its renewable goals.
At the end of third-quarter 2020, the company had $1.6 billion available liquidity and $2.1 billion of committed facilities, which are adequate to meet its debt obligations.
Headwinds
However, the utility is exposed to variability in cash flows associated with volatility in natural gas prices, which acts as a headwind to the stock. Also, despite efforts made to maintain its assets, the old machineries may turn defunct, causing unplanned outages and adversely impacting its operations.
Price Performance
In the past 12 months, shares of NiSource have lost 21.4% compared with the industry's decline of 7.4%.
Stocks to Consider
A few better-ranked stocks from the same sector are MGE Energy Inc. (MGEE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and Alliant Energy Corporation (LNT - Free Report) , all carrying a Zacks Rank #2 (Buy) at present.
The long-term (three-five years) earnings growth rate of MGE Energy, CenterPoint Energy and Alliant Energy is pegged at 4.9%, 5% and 6%, respectively.
MGE Energy, CenterPoint Energy and Alliant Energy reported an earnings surprise of 4.7%, 13.2% and 18.3%, respectively, on average, in the last four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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NiSource's (NI) Systematic Capital Investments Bode Well
NiSource Inc.’s (NI - Free Report) consistent investments in strengthening its existing infrastructure and focus on clean energy are going to drive its performance. Also, its strong liquidity position is a tailwind.
We issued an updated research report on this currently Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s long-term (three to five years) earnings growth is pegged at 5.60%.
What’s Driving the Stock?
NiSource is working on its long-term utility infrastructure modernization program. Over the 2021-2024 time frame, the company is going to invest in the range of $9.9-$10.5 billion, of which 60% is set aside for gas infrastructure, 20% for electric infrastructure and the rest for renewable generation.
The utility has a 100% regulated business model. More than 75% of NiSource’s capital expenditure starts providing returns in less than 18 months of investment. The company reiterated its 2021 net operating earnings per share guidance in the $1.28-$1.36 range and expects to see a 10-12% CAGR for the rate base through 2024. This will drive its earnings per share, witnessing a 7-9% CAGR in the 2021-2024 time frame.
Also, the company aims to reduce its greenhouse gas emissions by 90% within 2030 from the 2005 baseline and save more than $4 billion for customers of more than 30 years. The utility is planning to retire its 100% coal-generating sources by 2028 to replace the same with reliable and cleaner options at lower costs. Notably, NiSource has plans to invest in the $1.8-$2 billion band, primarily in 2022 and 2023, to meet its renewable goals.
At the end of third-quarter 2020, the company had $1.6 billion available liquidity and $2.1 billion of committed facilities, which are adequate to meet its debt obligations.
Headwinds
However, the utility is exposed to variability in cash flows associated with volatility in natural gas prices, which acts as a headwind to the stock. Also, despite efforts made to maintain its assets, the old machineries may turn defunct, causing unplanned outages and adversely impacting its operations.
Price Performance
In the past 12 months, shares of NiSource have lost 21.4% compared with the industry's decline of 7.4%.
Stocks to Consider
A few better-ranked stocks from the same sector are MGE Energy Inc. (MGEE - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and Alliant Energy Corporation (LNT - Free Report) , all carrying a Zacks Rank #2 (Buy) at present.
The long-term (three-five years) earnings growth rate of MGE Energy, CenterPoint Energy and Alliant Energy is pegged at 4.9%, 5% and 6%, respectively.
MGE Energy, CenterPoint Energy and Alliant Energy reported an earnings surprise of 4.7%, 13.2% and 18.3%, respectively, on average, in the last four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>