NiSource Poised at Neutral - Analyst Blog

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We retain our Neutral recommendation on NiSource Inc. ( NI ). 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) ALLETE Inc. ( ALE ), Entergy Corporation ( ETR ) and DTE Energy Company ( DTE ).



ALLETE INC (ALE): Free Stock Analysis Report

DTE ENERGY CO (DTE): Free Stock Analysis Report

ENTERGY CORP (ETR): Free Stock Analysis Report

NISOURCE INC (NI): Free Stock Analysis Report

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Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ALE , DTE , ETR , NI

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