We reiterate our Neutral recommendation on
). The electric utility presently carries a Zacks Rank #3
Why the Reiteration?
The reaffirmation is based on several generic risks that have
been affecting the company's operations for some time. NiSource's
transmission activities are vulnerable to accidents and unplanned
outages, which lead to extensive operational headwinds as seen in
the pipeline explosion which occurred in Columbia in late
However, the company has been aggressively investing in
upgrading its midstream initiatives, which will boost its
transportation and storage business. It has set aside a capital
outlay of $700 million for enhancing its various pipeline and
storage infrastructure units in 2013.
The company stands to gain from the high quality Big Pine
Gathering system which will come into service this month.
Further, the combined venture with Hilcorp is expected to be
another major highlight for 2013.
On the flip side, varying weather patterns and commodity price
volatilities would limit the company's growth.
Going forward, NiSource's sound financial position will
continue to support the company's ongoing development projects.
NiSource is also taking steps to reduce its debt burden. In late
Jan 2013, the company earned $120 million from a retail asset
sale to pure natural gas utility provider
AGL Resources Inc.
Nonetheless, stringent environmental legislations adopted by
the U.S. government will continue to pose cost challenges to the
company. Considering the pros and cons we have a cautious outlook
on NiSource Inc.
Other Stocks to Consider
Other utility stocks performing well and warrant a look are
Brookfield Infrastructure Partners L.P.
Pike Electric Corp.
). Both the stocks retain a Zacks Rank #1 (Strong Buy).
BROOKFIELD INFR (BIP): Free Stock Analysis
AGL RESOURCES (GAS): Free Stock Analysis
NISOURCE INC (NI): Free Stock Analysis Report
PIKE ELECTRIC (PIKE): Free Stock Analysis
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