NiSource Inc
. (
NI
), an energy holding company providing natural gas, electricity and
other products and services, is slated to release its
second-quarter 2012 earnings result before the market opens on July
31, 2012.
Recap, First Quarter-2012
NiSource reported a mixed overall performance in the first quarter
of 2012, posting a net adjusted income of 76 cents per share,
beating the Zacks Consensus Estimate of 72 cents per share and
year-ago earnings by 12 cents. Steady expansion in the customer
base resulted in the positive earnings outcome.
Although the company accrued benefits from its modernization and
expansion initiatives, revenue suffered a setback as the gas
distribution business plummeted by 33.6%. Total revenue took a hit
and fell substantially by 20.5% to $1.7 billion from $2.14 billion
in the year-ago quarter. Moreover, revenue fell short of the Zacks
Consensus Estimate of $2.2 billion.
Guidance 2012
NiSource remained firm to its original earnings guidance range of
$1.40 to $1.50 per share for 2012, backed by its constructive
regulatory and commercial solutions as well as profitable
investments, which will lead to sustainable growth.
Zacks Consensus
The Zacks Consensus Estimate for the second quarter 2012 is 20
cents per share, up 17.6% from 17 cents reported in the comparable
quarter last year. At present, the Zacks Consensus Estimate for
earnings ranges from 17 cents to 22 cents per share.
For full-year 2012, the Zacks Consensus Estimate is $1.45 per
share, higher than its previous year-end earnings of $1.31 per
share. The current Zacks Consensus Estimate ranges between $1.42
and $1.48 per share.
Estimate Revisions Trend
Agreement
We do not see any major estimate revisions at this point. Among the
4 estimates, 1 estimate moved in the upward direction while 1
estimate was revised downwards in the past 30 days for the second
quarter. For the said quarter, none of the estimates moved in the
last 7 days.
A similar trend could be seen for 2012 number over the last
month, with 1 out of the 5 estimates going up and 1 moving down.
The last 7 days saw no revisions to the estimates.
Magnitude
The Zacks Consensus Estimate for the second quarter remained
unchanged in the last 30 days. For full-year 2012, the consensus
estimate has also remained relatively static in the past month with
one movement in either direction canceling each other out.
Surprise History
With respect to earnings surprises, NiSource Inc. has reported
favorable earnings performance in the previous quarter as well as
in the second and third quarters of 2011, surpassing the
corresponding Zacks Consensus Estimates.
The fourth quarter 2011 earnings miss was, however, an
exception. The earnings surprise in the last four quarters ranges
from (13.9%) to 21.4%. The average surprise over the last four
quarters remained a positive 4.7%.
Our Recommendation
NiSource has been a prominent player in the US energy market, with
diversified natural and electric operations and a substantial
customer base of 3.8 million. We believe the company's regulated
operations should see significant growth, as they operate in an
area that accounts for nearly 50% of the nation's natural gas
consumption and where over 40% of its population is based.
The company's ambitious capital investment plan of $4 billion over
a 10- to 15-year period will aid in the company's goal of
modernizing its infrastructure in the long term to enhance the
reliability and flexibility of its pipeline business. Nevertheless,
certain generic risks including multiple regulatory obstacles,
inconsistent weather patterns and commodity price risks remain
causes for concern.
NiSource operates in a highly competitive energy market and faces
stiff cition from companies like
Duke Energy Corporation
(
DUK
) and
FirstEnergy Corporation
(
FE
).
Currently, we are maintaining a long-term Neutral recommendation on
NiSource Inc. The company has a Zacks #3 Rank implying a short-term
Hold rating on the stock.
DUKE ENERGY CP (DUK): Free Stock Analysis
Report
FIRSTENERGY CP (FE): Free Stock Analysis Report
NISOURCE INC (NI): Free Stock Analysis Report
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