NiSource (NI) is back in focus after a cluster of first quarter moves, including fresh fixed income offerings, a reaffirmed dividend, and updated earnings, giving investors more detail on its balance sheet and cash flows.
See our latest analysis for NiSource.
NiSource's share price has eased over the past month, with a 30 day share price return of down 3.64%. However, the year to date share price return of 10.41% and a 5 year total shareholder return of 114.68% point to longer term momentum that investors are weighing against recent bond issuance, the reaffirmed dividend and first quarter earnings.
If you are comparing NiSource with other power and grid related opportunities, it is a good time to widen your search using our 35 power grid technology and infrastructure stocks
With the stock up 19.7% over the past year and trading about 10% below the average analyst price target, the key question is whether NiSource is still priced attractively or if the recent run reflects markets already factoring in future growth.
Most Popular Narrative: 8.3% Undervalued
NiSource's most followed narrative pegs fair value at $50.79, above the last close of $46.55, framing the current price against future earnings and grid investments.
Strong visibility into multi-year, rate-based capital expenditure (base plan of $19.4B, plus more than $2B in upside or incremental projects) positions NiSource for 6 to 8% annual EPS growth and compound growth in regulated revenue.
Read the complete narrative. Read the complete narrative.
Want to see what keeps that earnings line climbing in the model? The narrative leans on rising margins, steady reinvestment, and a richer future earnings multiple.
Result: Fair Value of $50.79 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this depends on regulators continuing to approve NiSource's US$19.4b capital plan, and on gas demand not being reduced by faster electrification and decarbonization.
Find out about the key risks to this NiSource narrative.
Another Angle on NiSource's Valuation
Analysts see upside to $50.79, but NiSource currently trades on a P/E of 23.2x, slightly above the estimated fair ratio of 23x, the US peer average of 22.1x and the global integrated utilities average of 18.1x. That premium suggests less margin for error if the story changes.
To see how those numbers stack up in more detail, including what they might imply for future returns if sentiment cools or improves, check the breakdown in our valuation workup, including the fair ratio and peer checks, in the See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Does this mix of optimism and caution fit with your own read of NiSource, or does the balance feel off? Take a closer look at the key issues influencing sentiment and weigh them against the company’s potential, starting with 2 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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