NiSource Inc.’s NI focus on strengthening its existing infrastructure and efforts to increase the production of clean energy are likely to boost its performance. Its strong liquidity position is a boon too.
Let’s focus on the factors that make this presently Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projection & Surprise History
The Zacks Consensus Estimate for NI’s 2022 earnings and revenues is pegged at $1.45 per share and $5.5 billion, implying growth of 5.8% and 12.5%, respectively, from the corresponding year-ago reported figures.
NiSource’s long-term (three to five years) earnings growth is pegged at 7.2%. The company delivered an average earnings surprise of 5.1% in the last four quarters.
Investments & Clean Energy Goals
NiSource is working on a long-term utility infrastructure modernization program. NiSource made capital investments worth $1.9 billion in 2021 and has plans to invest in the range of $2.4-$2.7 billion in 2022. The company estimates $40-billion long-term natural gas and electric infrastructure investment opportunities, which are expected to drive earnings beyond 2024. Also, NI remains on track to make capital investments of nearly $10 billion within the 2021-2024 period.
NiSource is set to retire its 100% coal-generating sources by 2028 with reliable and cleaner options at lower costs. NI aims to reduce greenhouse gas emissions by 90% within 2030 from the 2005 levels. NiSource is also expected to retire 100% of coal-fired generation assets between 2026 and 2028 and replace production primarily with renewable generation. Concerning the delay in solar generation projects, the company now expects to retire Schahfer Generating Station’s remaining two coal units by the end of 2025. However, NiSource continues to expect that the Michigan City Generating Station will retire on schedule within the 2026-2028 period.
Long-term debts as of Jun 30, 2022 were $9,520.2 million compared with $9,183.4 million as of Dec 31, 2021. Its times interest earned ratio was 3.6 for the second quarter of 2022, up from 2.0 in the second quarter of 2021. NiSource had $1,643.1 million net liquidity available as of Jun 30, 2022, which is adequate to meet its debt obligations.
Moreover, its total debt-to-total-capital ratio for the second quarter of 2022 was 0.57%, lower than 0.58% in the second quarter of 2021. Furthermore, according to credit rating agencies like Moody’s, S&P and Fitch, the company has a stable credit score.
Return on Equity
NiSource’s Return on Equity for the trailing 12 months is 10.6% compared with the industry’s 10.4%, reflecting its efficiency in utilizing its shareholders’ funds.
In the past year, shares of NiSource have rallied 19.6%, outperforming the industry's growth of 6.6%.
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Other Stocks to Consider
Some other similar-ranked stocks from the Zacks Utility sector include Entergy Corporation ETR, NextEra Energy Inc. NEE and Alliant Energy Corporation LNT.
The long-term earnings growth of Entergy, NextEra Energy and Alliant Energy is projected at 7.2%, 9.3% and 6.2%, respectively.
The Zacks Consensus Estimate for 2022 earnings per share of Entergy, NextEra Energy and Alliant Energy has moved up 5.9%, 12.9% and 6.5% year over year, respectively.
ETR, NEE and LNT delivered an average earnings surprise of 6.9%, 5.5% and 5.8%, respectively, in the last four quarters.
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