On May 30, we have issued an updated research report on
diversified utility operator
). The company's infrastructure modernization drive will offer
sustainable long-term growth opportunities. The U.S. shale
explosion has led NiSource to gear up its midstream initiatives as
is evident from the critical Columbia Pipeline program slated for a
service start-up in 2014.
With the rally in upstream activity in the U.S., NiSource is
focusing diligently on expanding its pipeline networks. Infact, a
study by the ICF International revealed that the estimated need for
natural gas pipeline will be roughly 303,000 lines through 2035.
This explains the company's projected $4 billion capital
investments for midstream upgrade in the next five years which
would help maintain the positive momentum.
On the flip side, volatility in commodity prices might continue
to act as a deterrent. In addition, climate-induced sales variation
could undermine the company's performance.
NiSource, a Zacks Rank #2 (Buy) stock, kept its positive
earnings streak alive by posting healthy earnings beat in
first-quarter 2014. On a year-over-year basis, top and bottom line
witnessed impressive growth backed by higher contributions across
the company's segments.
The signs of economic improvement in NiSource's Indiana electric
service zones will also support its large utility-scale upgrade
projects. We believe these infrastructure-investment driven
strategies will likely catapult the company's future prospects.
On a positive note, NiSource's strong cash balance position,
which moved up 42% to $35 million as Mar 31, 2014, will provide
financial flexibility to efficiently carry out its growth-centric
However, accidents related to distribution, transmission and
storage activities could disrupt NiSource's operations. Moreover,
strict federal regulations could increase compliance cost
Key Picks from the Sector
Other better-ranked utility players include
NRG Energy Inc.
Korea Electric Power Corp.
CPFL Energia S.A.
). All the above stocks currently carry a Zacks Rank #1 (Strong
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NISOURCE INC (NI): Free Stock Analysis Report
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