We retain our Neutral recommendation on
). The diversified utility service provider currently maintains a
Zacks Rank #3 (Hold).
Why the Reiteration?
The utility faces continued weak economic fundamentals in the
U.S. and regulatory hurdles. With the stringent Mercuric and Air
Toxics Standards (MATS) regulations, utilities like NiSource are
engaged in installing environmental controls at their facilities
that aggravate the cost burden.
However, the company's project inventory of over $30 billion
would drive earnings in the upcoming quarters. Notable midstream
projects like Pennant and Big Pine Systems would boost the
company's prospects in the future.
On the flip side, adverse weather conditions can cause serious
disruptions to the company's operations. The National Oceanic
Atmospheric Administration ("NOAA") predicts that the U.S. will
be swamped by a series of violent hurricanes in the period Jun to
Nov 2013 which might pose challenges to NiSource's services.
Nevertheless, we believe the company's recent hike in the
quarterly dividend rate will attract investors' attention to the
stock. Favorable investment grade ratings will also act as a
catalyst in terms of raising funds from the capital markets
thereby supporting NiSource's growth-centric ventures.
The Zacks Consensus Estimate for 2013 reflects a projected
increase of 8.59% to $1.55 per share from the year-ago earnings
of $1.43 per share.
Other Stocks to Consider
Though we are cautious on NiSource, other utility companies
that are currently performing well and worth a look are Zacks
Rank #2 (Buy)
DTE Energy Company
ALLETE INC (ALE): Free Stock Analysis Report
DTE ENERGY CO (DTE): Free Stock Analysis
ENTERGY CORP (ETR): Free Stock Analysis
NISOURCE INC (NI): Free Stock Analysis Report
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