NI - NiSource Inc.: While Slightly Undervalued Higher For Longer May Bring A Deeper Discount
2024-04-08 06:44:25 ET
Summary
- NiSource is a holding company for two utilities: NIPSCO Gas & Electric in Indiana, and NiSource Gas Distribution Group in five eastern states.
- Shares are just slightly undervalued, but the 3.9% yield is not a strong incentive to buy. NiSource may reach a better entry point the longer interest rates remain elevated.
- NiSource operates in positive regulatory environments and is quickly transitioning towards renewable energy. EPS growth is 6.0-8.0%.
- Long-term, shares may be attractive to investors looking for diversification in smaller utilities east of the Mississippi.
NiSource Incorporated ( NI ) is a holding company for two utilities: NIPSCO Gas & Electric and NiSource Gas Distribution Group. It is the 25 th largest US utility by market cap, currently $12.2 billion, according to the Edison Electric Institute . NIPSCO (Northern Indiana Public Service Company) began in 1912 and currently serves 486,000 customers in Northern Indiana. NiSource Gas Distribution Group (formerly Columbia Energy) was built over many years through acquisitions and now serves 3.7 million customers in six states. It consists of five divisions, all named Columbia Gas, with operations in Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. NiSource acquired Columbia Energy in 2000, and together they formed the “largest gas company east of the Rockies.” Gas income is three times electric, so NiSource can be viewed as a gas distributor (it has 55,000 miles of pipeline), diversified with electric operations. Standard & Poor’s currently rates the company as BBB+ or lower medium investment grade....
NiSource Inc.: While Slightly Undervalued, Higher For Longer May Bring A Deeper Discount