NI - NiSource's Equity Issuance Reduces Upside (Rating Downgrade)

2024-06-20 22:53:36 ET

Summary

• NiSource stock has underperformed the market due to elevated interest rates affecting dividend-oriented and utility stocks.
• NiSource reported solid earnings growth in Q1, with operating income rising in both Columbia Gas and NIPSCO segments.
• The company plans to issue significant equity to fund growth projects, creating downside risk to EPS growth and dividend growth rates.

Shares of NiSource ( NI ) have been a modest performer over the past year, rising just 3%, significantly less than the S&P 500, as elevated interest rates have weighed on dividend-oriented and utility stocks. Higher rates make fixed income more competitive with dividend stocks, and for utilities, higher rates have raised concerns about the viability of future cap-ex plans, given increased funding costs....

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