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NiSource's (NI) Clean Energy Goals & CAPEX Plans Bode Well

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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. Its strong liquidity position is a boon too.

The Zacks Consensus Estimate for current-quarter earnings is pegged at 10 cents per share, indicating growth of 11.11% from the year-ago period’s reported figure. The consensus mark for current-quarter revenues stands at $990.1million, suggesting 9.71% growth from the prior-year period’s reported number. The company’s long-term (three to five years) earnings growth is pegged at 6.16%.

In the past six months, shares of this currently Zacks Rank#3 (Hold) company have lost 1.3% compared with the industry's fall of 1.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Six Months’ Price Performance

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

What’s Driving the Stock?

NiSource is working on its long-term utility infrastructure modernization program and aims to invest in the range of $9.6-$10.7 billion during the 2021-2024 time frame. The company has a 100% regulated business model and more than 75% of its capital expenditure starts providing returns in less than 18 months of investment. This will drive its earnings per share, seeing a 7-9% CAGR in the above-mentioned period.

Through cost-saving initiatives, the utility plans to cut its operating and maintenance expenses. In the first half of 2021, the same declined 6.3% from the year ago period’s level. Such measures will boost the company’s margins over the long term. It had $2.2-billion worth liquidity at the end of second-quarter 2021, adequate enough to meet its debt obligations.

The company aims to curb its greenhouse gas emissions by 90% within 2030 from its 2005 baseline. 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. It will retire its 1,300 MW R.M. Schahfer Generating Station by 2023 and replace the same with clean and renewable energy sources. Apart from NiSource, utilities like Duke Energy DUK, DTE Energy DTE and Xcel Energy XEL among others are undertaking measures to supply clean energy.

Headwinds

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


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

NiSource, Inc (NI) : Free Stock Analysis Report

Duke Energy Corporation (DUK) : Free Stock Analysis Report

DTE Energy Company (DTE) : Free Stock Analysis Report

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