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What's in Store for NiSource (NI) This Earnings Season?

Zacks Equity Research
Updated

NiSource Inc. NI will release first-quarter 2016 financial results before the market opens on May 3, 2016. In the prior quarter, this electric and natural gas utility reported a positive earnings surprise of 3.33%. Let’s see how things are shaping up at the company prior to this announcement.

Factors to Consider
 
NiSource has plans to strengthen its infrastructure and focus on its core operations by investing nearly $30 billion over the long term. This utility following the separation of Columbia Pipeline Group is aiming for 4% to 6% earnings growth.

This new gas rates approved in Pennsylvania and Massachusetts will help NiSource to generate additional revenues of nearly $65 million in 2016 from 2015 levels.

However, we believe the warmer-than-expected average temperature in the first quarter to adversely impact demand for electricity and natural gas.

Surprise History

The above chart indicates that NiSource was able to deliver positive surprises in three out of the last four quarters. The average positive surprise was 47.20%.

Earnings Whispers

Our proven model does not conclusively show that NiSource is likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here.

Zacks ESP: This is because the Most Accurate estimate is 55 cents while the Zacks Consensus Estimate is pegged at 56 cents, resulting in -1.79% ESP.

Zacks Rank: Though NiSource’s Zacks Rank #2 increases the predictive power of the ESP, its -1.79% ESP makes a beat uncertain this quarter.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Stocks in the utility space worth considering on the basis of our model are as follows:

Pinnacle West Capital Corp. PNW has an earnings ESP of +7.69% and a Zacks Rank #3. It is expected to report earnings on Apr 29, 2016.

Consolidated Edison, Inc. ED has an earnings ESP of +0.82% and a Zacks Rank #3. It is expected to report earnings on May 5, 2016.

Pattern Energy Group Inc. PEGI has an earnings ESP of +466.67% and a Zacks Rank #3. It is expected to report earnings on May 5, 2016.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PINNACLE WEST (PNW): Free Stock Analysis Report
 
NISOURCE INC (NI): Free Stock Analysis Report
 
CONSOL EDISON (ED): Free Stock Analysis Report
 
PATTERN ENERGY (PEGI): Free Stock Analysis Report
 
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Zacks Investment Research