NiSource Inc.NI

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

NiSource is still trying to get its house in order. Management is focused on improving consistency of earnings from regulated segments, cutting costs, and expanding its more profitable operations. Income investors could find meager upside to this story, Read more

Bulls Say

With regulated operations spread out across nine states, NiSource has a hedge against the negative earnings impact of unfavorable regulatory decisions in any one jurisdiction.

NiSource is pursuing expansion projects in its pipeline and storage operations, an area with solid growth prospects and potentially healthy returns.

In the past few years, NiSource has cut nearly 2,000 jobs to streamline operations and increase efficiency.

NiSource's gas distribution, transmission, and storage operations accounted for more than 60% of the company's revenue in 2008. These businesses typically generate steadier cash flows. Read more

Bears Say

NiSource's electric and gas rate structures do not allow for efficient cost recovery. This creates an unhealthy amount of regulatory lag when weather or usage differ materially from forecasts.

Conservation and customer attrition are higher in NiSource's service territories than those of most other utilities we cover. The electric utility has above-average exposure to industrial usage.

NiSource's capital-spending program might pay off in the long run, but in the short term, the company's poor credit ratings and debt-heavy balance sheet are getting shakier.

Financial troubles and ambitious capital spending severely jeopardize NiSource's overgenerous dividend, even after spending cuts. Read more

Strategy

Although we think management should be working to trim its debt and improve its credit ratings, NiSource is embarking on a major capital-expenditure program aimed at upgrading infrastructure at its gas Read more

Management

Robert Skaggs replaced Gary Neale as president and CEO of NiSource in 2005. To NiSource's credit, the position of chairman of the board was separated from the role of CEO, as they had not been under Neale. Skaggs took the reins under difficult circumstances--a Read more

Profile

NiSource is one of the largest natural gas distribution companies east of the Rocky Mountains. It also operates one of the largest natural gas storage networks in the United Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

How One Utility Outshines
Watch more