U.S. Markets open in 4 hrs 25 mins

NiSource (NI): Will it Disappoint this Earnings Season?

Zacks Equity Research

NiSource Inc. NI is set to report fourth-quarter 2016 results before the opening bell on Feb 22. Last quarter, the company posted a negative earnings surprise of 25%. Let’s see how things are shaping up for this announcement.

Factors at Play

Above-average temperatures in its service territories – Gulf Coast, Midwest & New England – in the fourth quarter are expected to hit top-line growth.

On the flip side, NiSource’s capital program and the constructive regulatory environment in its service territories are expected to drive revenue growth in the fourth quarter.

In the third quarter, NiSource’s Columbia Gas of Pennsylvania’s plea for an increase in base rates to support continued investments in infrastructure was approved. The new rates were effective Dec 19, 2016 and are expected to aid marginal revenue growth in fourth quarter.

Earnings Whispers

Our proven model does not conclusively show that NiSource is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat consensus estimates. However, that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 34 cents.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

NiSource, Inc Price and EPS Surprise

NiSource, Inc Price and EPS Surprise | NiSource, Inc Quote

Zacks Rank: NiSource currently carries a Zacks Rank #4 (Sell), which when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few stocks in the utility space worth considering as our model shows that they have the right combination of elements to post an earnings beat this quarter:

The Southern Company SO is slated to report earnings on Feb 22. It is has an Earnings ESP of +6.45% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

El Paso Electric Company EE has an Earnings ESP of +20% and a Zacks Rank #3. It is scheduled to release its quarterly numbers on Feb 23.

Pinnacle West Capital Corporation PNW has an Earnings ESP of +2.04% and a Zacks Rank #2. It is slated to report earnings on Feb 24.

Zacks’ Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?

Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report
Southern Company (The) (SO): Free Stock Analysis Report
NiSource, Inc (NI): Free Stock Analysis Report
El Paso Electric Company (EE): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research