On Tuesday, BMO Capital maintained its positive stance on NiSource (NYSE: NI) stock, adjusting the share price target to $32 from the previous $31 while keeping an Outperform rating. The adjustment follows a comprehensive quarterly review by the firm.
The analyst from BMO Capital revised the second-quarter 2024 earnings estimate for NiSource to $0.19 per share, up from $0.11 in the same quarter the previous year. The anticipated year-over-year improvement is attributed primarily to a combination of rate relief and riders, Allowance for Funds Used During Construction (AFUDC), and the elimination of perpetual preferred interest expenses.
These benefits are seen as somewhat balanced by increased depreciation and amortization (D&A) and interest expenses, as well as higher non-controlling interest (NCI) at NiSource's subsidiary, Northern Indiana Public Service Company (NIPSCO).
The upcoming earnings call is expected to draw investors' attention to NiSource's ongoing rate cases, potential data center growth opportunities, and the ongoing electric Integrated Resource Plan (IRP) process. These elements are seen as key factors influencing the company's financial and operational trajectory.
The BMO Capital analyst's revised price target of $32 is derived from a mark-to-market (MTM) sum of the parts (SOTP) valuation approach. This method takes into account the value of the company's individual segments and assets to arrive at an overall target price for the stock.
In other recent news, NiSource Inc (NYSE:NI). has been the subject of several significant developments. Barclays raised the price target for NiSource to $34, reflecting a positive shift in the growth forecast for the company's service territory in Indiana.
This is primarily due to expected large-scale energy demands from data centers, which could lead to earnings per share revisions. Analysts project that the new gas infrastructure required to meet this demand could add between $0.03 to $0.10 to NiSource's EPS by 2028.
Lastly, NiSource reported a 10% increase in Q1 adjusted EPS to $0.85 and confirmed a $16.4 billion base capital expenditure plan over the next five years. The company reaffirmed its 2024 adjusted EPS guidance and financial outlook through 2028, highlighting its confidence in meeting future commitments and maintaining balance sheet flexibility. These recent developments underscore NiSource's strong position in the energy sector and its potential for future growth.
InvestingPro Insights
As investors gauge the future potential of NiSource (NYSE: NI), real-time data from InvestingPro paints a detailed financial landscape. With a market capitalization of $13.33 billion and a P/E ratio standing at 18.36, NiSource is trading at a valuation that merits attention. The company's P/E ratio has adjusted slightly higher in the last twelve months as of Q1 2023 to 19.35, indicating a market anticipation of steady earnings. Despite a revenue decline of 11.74% over the same period, NiSource has managed to maintain a strong gross profit margin of 49.22%, showcasing its ability to control costs effectively.
From an investment standpoint, two key InvestingPro Tips offer additional insights: NiSource has a track record of raising its dividend for 7 consecutive years, demonstrating a commitment to shareholder returns. Moreover, the stock's low price volatility could appeal to investors seeking stability in their portfolios. For those looking to delve deeper into NiSource's financial nuances, there are additional InvestingPro Tips available, which can be explored with the use of coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
While the company's short-term obligations exceeding liquid assets may raise some concerns, the commitment to dividend payments for 38 consecutive years and the prediction by analysts of profitability this year provide a counterbalance. With the stock trading near its 52-week high, at 98.31% of this peak, investors should monitor the upcoming earnings call for further indicators of the company's direction. The InvestingPro platform offers a comprehensive set of tools and data for a deeper analysis of NiSource's financial health and market prospects.
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