We retain our neutral recommendation on Indiana-based,
). The company posted mixed results in the second quarter 2012 with
earnings beating and revenues missing the Zacks Consensus
Estimates. We believe the company's recent infrastructure
modernization drive will ensure favorable performance in the
The company's proposed upgrading of its Columbia gas pipeline
infrastructure will provide reliable and uninterrupted service to
its customers. NiSource's long-term infrastructure enhancement plan
for its Gas distribution business is also expected to boost its
profitability in the near term.
NiSource's total capital investment goal of $1.4 billion for
2012 will enable the company to diversify its operations and make
high-quality asset acquisitions. The company's notable investments
during the second quarter included two expansion ventures with
Hilcorp Energy in the resource-rich Utica play. One of the ventures
is related to the development of midstream infrastructure while the
other is focused on hydrocarbon prospects. We believe these
projects will enable the company to stimulate its future growth
However, the company's distribution and transmission activities
are highly exposed to threats associated with leaks and accidents
which could lead to extensive financial losses. In addition,
uncertainty in the Columbia Massachusetts and Columbia Gas
Pennsylvania rate case outcomes could take a toll on the company's
NiSource's disciplined financial strategy is expected to provide
sufficient flexibility for its various growth-related projects in
2012. Moreover, a solid 4% plus annualized dividend rate will
undoubtedly retain investor confidence in the company's stock.
Nonetheless, we anticipate generic risks like varied weather
conditions and cost of compliance with environmental regulations
could significantly impact NiSource's margins.
NiSource reaffirmed its full year 2012 earnings guidance in the
range of $1.40-$1.50 per share. The Zacks Consensus Estimates for
the third quarter and full year 2012 currently stand at 17 cents
per share and $1.45 per share, respectively.
The company's closest peer is Ohio-based,
). NiSource presently has a short-term Zacks #3 Rank (Hold
NiSource Inc. is an energy holding company whose subsidiaries
provide natural gas, electricity and other products and services in
the U.S. Its operating subsidiaries deliver energy within the
high-demand energy corridor stretching from the Gulf Coast through
the Midwest to New England.
FIRSTENERGY CP (FE): Free Stock Analysis Report
NISOURCE INC (NI): Free Stock Analysis Report
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