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NiSource Investing Heavily In Infrastructure

By: Investor's Business Daily
Posted: 11/4/2013 5:59:00 PM
Referenced Stocks: NI

Utility companyNiSource 's ( NI ) fundamentals have shown a bit of slack.

Earnings increased modestly the past few years as revenue declined the past three years. But analysts expect improvement.

For the fourth quarter, analysts estimate revenue of $1.45 billion, up 4%, according to Thomson Reuters. EPS is pegged at 47 cents, up 7% over the year-ago period.

Full 2013 revenue is expected to rise 12% and in 2014 up a further 6%. For 2014, the consensus estimate for EPS is an increase of 8%.

The company's major infrastructure investment programs and a modest economic recovery are the main factors behind the company's outlook, noted a report from Hilliard Lyons following NiSource's results.

NiSource -- which provides natural gas and electricity services to about 4 million customers stretching from the Gulf Coast through the Midwest to New England -- is spending heavily on pipelines and other modernizations.

It is also seeking rate increases in some states.

"We appreciate NiSource's capital expenditure program of $2 billion for the year, nearly 75% of which is focused on accretive and other revenue-generating investments," Zacks Investment Research noted in a report following NiSource's earnings announcement. "This will likely benefit the company's top line, thereby expanding margins."

NiSource pays a quarterly dividend of 25 cents a share, for an annualized yield of about 3%. The dividend was most recently increased in March, when NiSource announced it was raising it from 24 cents a share.

The stock broke out of a cup-with-handle base Oct. 17 and closed Monday 1% above the 31.34 buy point. Shares haven't quite recovered to the all-time high reached 15 years ago.

NiSource remains heavily owned by institutions. A total 879 funds hold its shares.