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NiSource (NI) Rides on Strategic Investments & Cost Management
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NiSource Inc. (NI - Free Report) and its subsidiaries provide natural gas, electricity, and other products and services in the United States. Its long-term capital expenditure plans and strategic investments for expansion in clean energy will boost the performance of the company.
NI currently has a Zacks Rank #3 (Hold). Let’s look at the factors that could impact the performance of the company.
Tailwinds
NiSource is working on a long-term utility infrastructure modernization program. The company aims to invest in the range of $3.3-$3.5 billion for 2024. It also expects to invest approximately $16.4 billion during 2024-2028.
Management expects annual rate base growth in the range of 8-10% during 2023-2028, driven by capital expenditure. The company’s strategic investments will enhance the reliability and safety of its services to provide efficient and uninterrupted electric and natural gas supply to its customers.
The company aims to lower operation and maintenance (O&M) expenses. These cost-saving measures will boost its margins over the long term. It launched an enterprise-wide transformation effort called Project Apollo. The project will cover several initiatives and generate annual savings in the range of $40-$60 million, starting in 2023. Project Apollo achieved its goal of more than $50 million of cost savings initiatives in 2023. The project is expected to maintain flat O&M expenses through the duration of the five-year plan.
NiSource is set to retire its 100% coal-generating sources between 2026 and 2028 and replace production volumes with cheaper, reliable, and cleaner options. The company aims to reduce greenhouse gas emissions by 90% by 2030. Its first two solar projects, Dunns Bridge 1 and Indiana Crossroads Solar, came online in July 2023. Constructions on Cavalry Solar Plus Storage and Dunns Bridge 2 Solar Plus Storage are expected to commence in late 2024.
Headwinds
The company has to comply with numerous federal, state, and local laws and regulations, changes to which could highly affect its operations. The cost of compliance with the regulations could increase the cost of operations. Even though the regulated utilities have provisions in place to recover the costs, increased costs might significantly affect its earnings.
Price Performance
Shares of NiSource have gained 13.2% in the past three months compared with the industry’s 7.7% growth.
The Zacks Consensus Estimate for FirstEnergy’s 2024 and 2025 earnings has increased 0.75% and 0.35%, respectively, in the last 60 days. The company’s long-term earnings growth is pinned at 5.87%.
Consolidated Edison has delivered an average earnings surprise of 5.9% in the last four quarters. The consensus estimate for earnings for 2024 and 2025 indicates year-over-year growth of 5.13% and 5.15%, respectively.
CenterPoint’s long-term (three to five years) earnings growth is pinned at 7%. The Zacks Consensus Estimate for earnings for 2024 and 2025 indicates year-over-year growth of 8% and 7.28%, respectively.
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NiSource (NI) Rides on Strategic Investments & Cost Management
NiSource Inc. (NI - Free Report) and its subsidiaries provide natural gas, electricity, and other products and services in the United States. Its long-term capital expenditure plans and strategic investments for expansion in clean energy will boost the performance of the company.
NI currently has a Zacks Rank #3 (Hold). Let’s look at the factors that could impact the performance of the company.
Tailwinds
NiSource is working on a long-term utility infrastructure modernization program. The company aims to invest in the range of $3.3-$3.5 billion for 2024. It also expects to invest approximately $16.4 billion during 2024-2028.
Management expects annual rate base growth in the range of 8-10% during 2023-2028, driven by capital expenditure. The company’s strategic investments will enhance the reliability and safety of its services to provide efficient and uninterrupted electric and natural gas supply to its customers.
The company aims to lower operation and maintenance (O&M) expenses. These cost-saving measures will boost its margins over the long term. It launched an enterprise-wide transformation effort called Project Apollo. The project will cover several initiatives and generate annual savings in the range of $40-$60 million, starting in 2023. Project Apollo achieved its goal of more than $50 million of cost savings initiatives in 2023. The project is expected to maintain flat O&M expenses through the duration of the five-year plan.
NiSource is set to retire its 100% coal-generating sources between 2026 and 2028 and replace production volumes with cheaper, reliable, and cleaner options. The company aims to reduce greenhouse gas emissions by 90% by 2030. Its first two solar projects, Dunns Bridge 1 and Indiana Crossroads Solar, came online in July 2023. Constructions on Cavalry Solar Plus Storage and Dunns Bridge 2 Solar Plus Storage are expected to commence in late 2024.
Headwinds
The company has to comply with numerous federal, state, and local laws and regulations, changes to which could highly affect its operations. The cost of compliance with the regulations could increase the cost of operations. Even though the regulated utilities have provisions in place to recover the costs, increased costs might significantly affect its earnings.
Price Performance
Shares of NiSource have gained 13.2% in the past three months compared with the industry’s 7.7% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the industry are FirstEnergy Corporation (FE - Free Report) , Consolidated Edison, Inc. (ED - Free Report) , and CenterPoint Energy (CNP - Free Report) . Each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
The Zacks Consensus Estimate for FirstEnergy’s 2024 and 2025 earnings has increased 0.75% and 0.35%, respectively, in the last 60 days. The company’s long-term earnings growth is pinned at 5.87%.
Consolidated Edison has delivered an average earnings surprise of 5.9% in the last four quarters. The consensus estimate for earnings for 2024 and 2025 indicates year-over-year growth of 5.13% and 5.15%, respectively.
CenterPoint’s long-term (three to five years) earnings growth is pinned at 7%. The Zacks Consensus Estimate for earnings for 2024 and 2025 indicates year-over-year growth of 8% and 7.28%, respectively.