Morningstar Rating

Stock Research and Analysis

by Charles Fishman, CFA

Bulls Say

We expect NiSource to increase its dividend at an annual rate of approximately 3.5%-4%, a rate we believe is sustainable even with the increase in capital expenditures.
NiSource has leases for up to 200,000 acres in the Utica shale-gas formation, a portion of which NiSource will contribute to the HilCorp JV, reducing the development cash needs and risk.
FERC regulation tends to be less influenced by political agendas versus state regulatory bodies. This usually provides more constructive regulatory decisions and higher allowed returns on equity for natural gas transmission lines. Read more 

Bears Say

Almost 50% of NiSource's electric sales are to industrial customers, higher than most utilities. Industrial sales are more sensitive to the economy than residential and commercial sales.
Low natural gas prices could reduce shale-gas drilling activity in the Marcellus region, reducing opportunities for new gas gathering and transportation projects.
Although NiSource reports weather-normalized operating earnings, mild weather negatively affects GAAP earnings and cash flow. Read more 

Management

We assign NiSource a standard stewardship rating. We think management has done a good job managing state and federal regulatory relations. In addition, although one could argue it was luck that located NiSource's Columbia Pipeline in the middle of the   Read more 

Profile

NiSource is one of the nation's largest natural gas distribution companies with 3.4 million customers in Indiana, Kentucky, Maryland, Massachusetts, Ohio, Pennsylvania,   Read more 

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