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Why Is NiSource (NI) Down 1% Since Last Earnings Report?

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A month has gone by since the last earnings report for NiSource (NI). Shares have lost about 1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NiSource due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

NiSource's Q3 Earnings Beat Estimates, Revenues Rise Y/Y

NiSource delivered net operating earnings of 11 cents per share in third-quarter 2021, surpassing the Zacks Consensus Estimate of 10 cents by a penny. The same improved 22.2% from the year-ago quarter’s figure.

On a GAAP basis, the company reported earnings of 12 cents per share against the loss figure of 49 cents in the year-ago quarter.

Total Revenues

Total operating revenues of $959.4 million generated in the third quarter lagged the Zacks Consensus Estimate of $990 million by 3.1%. However, the top line improved 6.3% from $902.5 million reported in the year-ago quarter.

Highlights of the Release

Total operating expenses in the quarter under review rose 0.3% year over year to $812.3 million.

Net interest expenses in the reported quarter decreased 11.3% from the prior-year quarter’s figure to $84.4 million.

In the reported quarter, the company reached a settlement for the Columbia Gas of Pennsylvania 2021 base rate case while it filed another such case for the Northern Indiana Public Service Company.

Financial Update

NiSource's cash and cash equivalents as of Sep 30, 2021 were $38.5 million, down from $116.5 million as of Dec 31, 2020.

Long-term debts (excluding amounts due within a year) as of Sep 30, 2021 were $9,188.2 million compared with $9,219.8 million as of Dec 31, 2020.

Net cash flows from operating activities in the first three quarters of 2021 were $939.3 million compared with $858.6 million in the comparable period of 2020.

Outlook

NiSource reaffirmed its prior 2021 non-GAAP net operating earnings guidance in the range of $1.32-$1.36 and initiated the same for 2022 in the range of $1.42-$1.48 per share. It expects earnings to see a CAGR of 7-9% from 2021 through 2024 including a near-term annual growth rate of 5-7% through 2023.

For the ongoing year, it plans to spend $2 billion and for 2022, it intends to invest in the band of $2.4-$2.7 billion. Through 2024, the utility anticipates investing $1.9-$2.2 billion, annually, in growth, safety and modernization along with $2 billion in renewable-generation assets. These investments are likely to improve the rate base, which is likely to witness a CAGR of 10-12% for each of the company’s businesses until 2024.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months.

VGM Scores

Currently, NiSource has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

NiSource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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