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NiSource's (NI) Clean Energy Goals & CAPEX Plans Bode Well
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NiSource Inc.’s (NI - Free Report) 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.
The Zacks Consensus Estimate for current-quarter earnings is pegged at 38 cents per share, indicating growth of 11.76% from the year-ago period’s reported figure. The consensus mark for current-quarter revenues stands at $1.47 billion, suggesting 21.01% growth from the prior-year period’s reported number. NI’s long-term (three to five years) earnings growth is pegged at 6.66%.
NiSource is working on its long-term utility infrastructure modernization program and aims to invest $2 billion in 2021 and $7.7-$8.6 billion over the 2022-2024 time frame. NI 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 earnings per share, seeing a 7-9% CAGR in the 2021-2024 period.
Through cost-saving initiatives, NiSource plans to cut its operation and maintenance expenses. In the first nine months of 2021, the same declined 8.7% from the year-ago period’s level. Such measures will boost margins over the long term. NI had $1,698.3 million net liquidity available as of Sep 30, 2021, which is adequate to meet its debt obligations.
NiSource intends to curb its greenhouse gas emissions by 90% within 2030 from its 2005 baseline and plans to retire its 100% coal-generating sources by 2028 to replace the same with reliable and cleaner options at lower costs. NI will retire its 1,300 MW R.M. Schahfer Generating Station by 2023 and replace the same with clean and renewable energy sources.
Other electric utilities also adopting measures to supply clean and reliable energy to their customers are, namely, Duke Energy (DUK - Free Report) , DTE Energy (DTE - Free Report) and Alliant Energy (LNT - Free Report) , all carrying a Zacks Rank of 3 at present. All three stocks are planning to provide absolute clean energy by 2050.
DTE Energy remains committed to reducing carbon emissions of its electric utility operations by 32% within 2023, 50% by 2030 and 80% by 2040 from the 2005 carbon emissions levels. Duke Energy plans to reduce carbon footprint between approximately 55% and 75% through 2035. Alliant Energy aims to retire all its existing coal-fired generation units by 2040 with an objective to lower emissions from the 2005 baseline by 50% within 2030.
Headwinds
NiSource is exposed to variability in cash flows associated with volatility in natural gas prices, which acts as an overhang on the stock. Despite efforts to maintain NI’s assets, the old machinery may turn defunct, causing unplanned outages and adversely impacting its operations.
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NiSource's (NI) Clean Energy Goals & CAPEX Plans Bode Well
NiSource Inc.’s (NI - Free Report) 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.
The Zacks Consensus Estimate for current-quarter earnings is pegged at 38 cents per share, indicating growth of 11.76% from the year-ago period’s reported figure. The consensus mark for current-quarter revenues stands at $1.47 billion, suggesting 21.01% growth from the prior-year period’s reported number. NI’s long-term (three to five years) earnings growth is pegged at 6.66%.
In the past three months, shares of this currently Zacks Rank #3 (Hold) NiSource have lost 0.4% compared with the industry's fall of 1.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Three Months’ Price Performance
What’s Driving the Stock?
NiSource is working on its long-term utility infrastructure modernization program and aims to invest $2 billion in 2021 and $7.7-$8.6 billion over the 2022-2024 time frame. NI 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 earnings per share, seeing a 7-9% CAGR in the 2021-2024 period.
Through cost-saving initiatives, NiSource plans to cut its operation and maintenance expenses. In the first nine months of 2021, the same declined 8.7% from the year-ago period’s level. Such measures will boost margins over the long term. NI had $1,698.3 million net liquidity available as of Sep 30, 2021, which is adequate to meet its debt obligations.
NiSource intends to curb its greenhouse gas emissions by 90% within 2030 from its 2005 baseline and plans to retire its 100% coal-generating sources by 2028 to replace the same with reliable and cleaner options at lower costs. NI will retire its 1,300 MW R.M. Schahfer Generating Station by 2023 and replace the same with clean and renewable energy sources.
Other electric utilities also adopting measures to supply clean and reliable energy to their customers are, namely, Duke Energy (DUK - Free Report) , DTE Energy (DTE - Free Report) and Alliant Energy (LNT - Free Report) , all carrying a Zacks Rank of 3 at present. All three stocks are planning to provide absolute clean energy by 2050.
DTE Energy remains committed to reducing carbon emissions of its electric utility operations by 32% within 2023, 50% by 2030 and 80% by 2040 from the 2005 carbon emissions levels. Duke Energy plans to reduce carbon footprint between approximately 55% and 75% through 2035. Alliant Energy aims to retire all its existing coal-fired generation units by 2040 with an objective to lower emissions from the 2005 baseline by 50% within 2030.
Headwinds
NiSource is exposed to variability in cash flows associated with volatility in natural gas prices, which acts as an overhang on the stock. Despite efforts to maintain NI’s assets, the old machinery may turn defunct, causing unplanned outages and adversely impacting its operations.