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NiSource (NI) Rides on Clean Energy Goals & CAPEX Plans

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·3 min read
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NiSource Inc.’s NI focus on strengthening its existing infrastructure and efforts to increase production of clean energy are likely to boost its performance. Also, its strong liquidity position is a boon.

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 Zacks Consensus Estimate for 2021 earnings is pegged at $1.34 per share, indicating growth of 1.52% from the year-ago reported figure. Also, the consensus mark for current-year revenues stands at $5.48 billion, suggesting 17.04% growth from the prior-year reported number.

The company’s long-term (three to five years) earnings growth is pegged at 6.39%.

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 $9.6-$10.7 billion. 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. This will drive its earnings per share, witnessing a 7-9% CAGR in the 2021-2024 forecast period.

Through cost-saving initiatives, it plans to reduce operating and maintenance (O&M) expenses by nearly 8% in 2021 from its 2020 level. These cost-control measures will definitely boost margins of the company over the long term. The utility had $1.9 billion liquidity available at the end of first-quarter 2021 and $2.3 billion of committed facilities, which are adequate to meet its debt obligations.

Also, the company aims to curb its greenhouse gas emissions by 90% within 2030 from its 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 through joint ventures and PPA agreement is scheduled to add nearly 1,030 MW of clean generation to its existing portfolio by 2023 end.

NiSource apart, utilities like Duke Energy DUK, DTE Energy DTE and Xcel Energy XEL among others are undertaking measures to supply clean energy.


However, the utility is exposed to variability in cash flows associated with volatility in natural gas prices, which acts as an overhang on the stock. Also, despite efforts made to maintain its assets, the old machineries may turn defunct, causing unplanned outages and adversely impacting the company’s operations.

Price Performance

In the past six months, shares of NiSource have rallied 7%, outperforming the industry's growth of 3.9%.

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Xcel Energy Inc. (XEL) : Free Stock Analysis Report

NiSource, Inc (NI) : Free Stock Analysis Report

DTE Energy Company (DTE) : Free Stock Analysis Report

Duke Energy Corporation (DUK) : Free Stock Analysis Report

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