Back to top

Analyst Blog

Zacks Equity Research

NiSource (NI) Thrives on Systematic Infrastructure Investments

AEE NI DTE AVA

Trades from $3

On Nov 23, we issued an updated research report on diversified utility NiSource Inc. (NI - Free Report) . NiSource’s consistent efforts on strengthening its infrastructure and investments in regulated operations will continue to boost its performance. However, inconsistent weather conditions might deter NiSource’s growth.

Recently, NiSource reported third-quarter 2016 operating earnings of 6 cents per share, missing the Zacks Consensus Estimate of 8 by a wide 25%. In the year-ago quarter, the company had recorded breakeven results. Moreover, gross revenues of $853.9 million lagged the Zacks Consensus Estimate of $863 million by 1.1%.

Having identified long-term infrastructure investments worth $30 billion, NiSource intends to spend nearly $1.5 billion as utility infrastructure investments in 2016 and 2017 each. Consistent investments will allow the company to achieve its targeted earnings growth rate of 4% to 6% over the long term.

NiSource’s Northern Indiana Public Service Company (NIPSCO) continues to be on track with its business strategy backed by an inventory of investment opportunities. This month, NIPSCO submitted the Integrated Resource Plan (IRP). It outlines the subsidiary’s plans for meeting long-term electricity needs by providing affordable clean energy, while maintaining the flexibility to adapt to future technology and market changes.

NiSource has a 100% regulated utility business model. Its planned regulated investments will improve reliability and safety of its services, and ensure uninterrupted supply of natural gas to an expanding customer base.

On the flip side, NiSource’s operations are spread over a wide geographical area and are influenced by varied and extreme weather conditions. Significant shift from normal weather conditions might present operational challenges and hinder service reliability. Mild weather patterns will also have an adverse impact on residential demand and constrain margins.

Zacks Rank & Key Picks

NiSource carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Avista Corp. (AVA - Free Report) , Ameren Corporation (AEE - Free Report) and DTE Energy Company (DTE - Free Report) .

Avista has seen one upward estimate revision for 2016 over the last 60 days. The stock carries a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren Corp., another Zacks Rank #2 stock, has seen four upward estimate revisions for 2016 over the last 60 days.

DTE Energy has seen six upward estimate revisions for 2016 over the last 60 days. The stock carries a Zacks Rank #2 as well.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>