Nicor Inc.GAS

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

Nicor has been working to improve financial performance at its gas utility in the face of rising costs for nearly all inputs, including labor. The company went back to the trough for a rate increase in 2008 to try to pass on some of those costs to ratepayers. Read more

Bulls Say

Nicor has consistently proven adept at cost efficiency, remaining a low-cost provider of natural gas relative to the rest of the industry.

With its entrenched position and steady revenue, Nicor should be able to pay out solid dividends going forward, with low-single-digit growth.

For most customers, Nicor collects about 50% of its fees through a fixed customer charge, which helps insulate the company from fluctuations in demand for natural gas.

With its excellent credit ratings and healthy balance sheet, this company could afford to take on more debt without too much concern. Read more

Bears Say

Nicor operates in one of the most unfriendly regulatory climates in the country.

A scandal surrounding the company's now-defunct performance-based rate plan probably tarnished Nicor's reputation in the eyes of its regulators and customers and could lead to a sizeable refund.

The economic downturn and torpid customer growth rates could continue to squeeze Nicor's profitability. Read more

Strategy

While management has a proven record of cost efficiency, the company will probably need to continue filing for rate relief. Nicor is pursuing a more efficient and decoupled rate design in addition to Read more

Management

Russ Strobel has been chairman, president, and CEO of Nicor since 2005 and CEO of Nicor Gas since 2003. Strobel joined Nicor as general counsel amid the mercury-spillage debacle in 2000. His effective handling of the mercury situation led to his rapid Read more

Profile

Nicor is an energy services holding company that provides natural gas supply and delivery to 2.2 million customers in northern Illinois through its regulated distribution Read more

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