NiSource Inc. (NYSE:NI) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. Unfortunately, NiSource delivered a serious earnings miss. Revenues of US$1.6b were 16% below expectations, and statutory earnings per share of US$0.16 missed estimates by 79%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from NiSource's eight analysts is for revenues of US$5.19b in 2020, which would reflect a reasonable 5.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 157% to US$1.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.47b and earnings per share (EPS) of US$1.27 in 2020. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The consensus has reconfirmed its price target of US$27.93, showing that the analysts don't expect weaker sales expectations next year to have a material impact on NiSource's market value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on NiSource, with the most bullish analyst valuing it at US$32.00 and the most bearish at US$26.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that NiSource's rate of growth is expected to accelerate meaningfully, with the forecast 5.1% revenue growth noticeably faster than its historical growth of 2.8%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect NiSource to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$27.93, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for NiSource going out to 2024, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 5 warning signs for NiSource you should be aware of, and 1 of them makes us a bit uncomfortable.
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