We have reiterated our Neutral recommendation on
) owing to the company's mixed results in third-quarter 2012.
NISOURCE INC (NI): Free Stock Analysis Report
NORTHEAST UTIL (NU): Free Stock Analysis
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In the third quarter of 2012, the company's earnings surpassed
the Zacks Consensus Estimate whereas revenues missed the same.
However, the company's top- and bottom-line figures were ahead of
the year-ago results primarily due to strong performance from the
transmission segment related to the merger with NSTAR.
Like most of the utility providers, Northeast's operations are
also subject to the federal, state, and local legislative
requirements. The regulators frequently alter and adjust existing
rules. The companies' incur significant costs related to the
changes in existing compliances and addition of new laws.
We believe that the NSTAR-merger will allow Northeast to increase
its scale of operations and widen customer base, which will
subsequently enable it to achieve earnings growth in the long
As far as the company's organic growth strategies are concerned,
Northeast intends to invest $1.7 billion under its full-year 2012
infrastructure spending program for numerous expansion and
development activities. These initiatives will allow the company
to increase its transmission capacity, which will subsequently
help to meet the rising customers' demand. Later, this will
provide the company attractive earnings and cash flow growth over
the next couple of years.
The companies, which deal with transmission and distribution
businesses, sometimes face several operational risks including
breakdown, failure or damage of equipments or processes,
accidents, natural calamities and labor disputes. We expect
Northeast's fourth-quarter and full-year 2012 financial
performance to be, to some extent, negatively impacted by
Considering several positive and negative factors, Northeast has
a short-term Zacks #3 Rank (Hold rating). One of its close peers
) has a short-term Zacks #4 Rank (Sell rating).
Hartford, Connecticut and Boston, Massachusetts-based Northeast
Utilities provides energy delivery services to residential,
commercial and industrial customers in Connecticut, New Hampshire
and Massachusetts. With a market capitalization of $11.90
billion, the company has 6,063 full time employees.