NiSource
NI
$40.58
-0.81%
NiSource Inc. is one of the largest regulated natural gas distribution and electric utility holding companies in the United States, serving approximately 2.4 million natural gas customers across Kentucky, Maryland, Ohio, Pennsylvania, and Virginia, plus 1.4 million gas and electric customers in Indiana through its NIPSCO subsidiary, which owns roughly 4 gigawatts of generation capacity spanning coal, natural gas, and renewables. As a fully regulated utility, NiSource's identity is defined by predictable, rate-base-driven earnings rather than commodity or merchant power exposure, making it a classic defensive income vehicle with a beta of just 0.54. The current investor narrative centers on an aggressive multi-year capital investment program aimed at replacing aging gas infrastructure and transitioning the Indiana generation fleet toward renewables, which management expects to drive rate-base growth and mid-single-digit to high-single-digit EPS expansion. That constructive story, however, is being tested by a sharp share-price decline over the past six months, negative trailing free cash flow from heavy capex, and a dividend payout ratio above 57%, leaving investors to debate whether the recent selloff represents an attractive entry point into a regulated growth story or a warning about financing strain and rate-case risk.…
NI
NiSource
$40.58
Investment Opinion: Should I buy NI Today?
Rating: Hold with a bullish bias. The core thesis is that NiSource offers a favorable risk/reward for income-oriented investors willing to tolerate near-term volatility, with the analyst consensus Buy rating and $49.86 average target implying +20.4% upside, but the negative free cash flow and elevated leverage warrant caution until the capex cycle shows signs of converting to positive cash generation. The 14-analyst coverage with a recommendation mean of 1.6 and no recent downgrades supports a constructive institutional view.
Supporting evidence includes revenue growth of 8.24% year over year in Q1 2026, gross margin expansion of 873 basis points to 59.48%, and a forward PE of 18.38x that is reasonable for a regulated utility with mid-single-digit growth. The PEG ratio of 1.05 suggests growth is fairly priced, and the 2.69% dividend yield, while below the 3-4% utility average, is backed by a 57.06% payout ratio that leaves room for continued distributions. The implied upside to the analyst average target of $49.86 is substantial, and the tight EPS estimate range of $2.90 to $3.10 signals high confidence in near-term earnings.
The biggest risks that could invalidate the thesis are a deterioration in free cash flow beyond the current -$832 million, a debt-to-equity ratio exceeding 1.72x, and adverse regulatory outcomes in key rate cases. This Hold would upgrade to Buy if free cash flow turns positive or if the stock breaks below $39.30 with stabilizing fundamentals, and it would downgrade to Sell if the dividend payout ratio exceeds 70% or if revenue growth decelerates below 5%. Relative to its own history and the utility sector, NI appears fairly valued to slightly undervalued given the growth trajectory, but the premium PB of 2.09x limits multiple expansion potential.
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NI 12-Month Price Forecast
NiSource presents a balanced risk/reward profile, with the market pricing in significant skepticism that contrasts with analyst optimism. The stock's -12.62% six-month decline and -28.02% relative underperformance versus SPY have created a valuation disconnect, but the negative free cash flow and elevated leverage are real concerns that could cap upside. The base case of a range-bound stock between $43 and $50 is most likely, with the bull case dependent on successful capex execution and the bear case triggered by regulatory or financing setbacks. I would upgrade to bullish if free cash flow turns positive or if the stock stabilizes above $45, and downgrade to bearish if the dividend is cut or if debt-to-equity exceeds 2.0x.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on NiSource's 12-month outlook, with a consensus price target around $49.86 and implied upside of +22.9% versus the current price.
Average Target
$49.86
0 analysts
Implied Upside
+22.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$43 - $55
Analyst target range
Coverage on NiSource is solid with 14 analysts, and the consensus recommendation is a Buy with a recommendation mean of 1.6 (where 1.0 is Strong Buy and 5.0 is Strong Sell), indicating a constructive but not euphoric institutional stance. The average target price is $49.86, which implies +20.4% upside from the current price of $41.41 — a substantial gap that suggests analysts view the recent selloff as overdone relative to fundamental value. The consensus EPS estimate of $3.01 (range $2.90 to $3.10) and revenue estimate of $9.38 billion (range $9.11 billion to $9.59 billion) underpin that target, and the tight EPS range of just $0.20 signals high confidence in near-term earnings visibility, typical of a regulated utility. The bullish tilt is notable given the stock's -12.29% three-month performance, implying that analysts see the weakness as sentiment-driven rather than fundamental. The target range spans $43.00 to $55.00, a spread of $12.00, or 24.1% of the average target — a moderately wide dispersion that reflects genuine disagreement about the pace of rate-base growth and capex financing. The high target of $55.00 implies roughly +32.8% upside and likely assumes successful execution of the capital program, constructive rate-case outcomes, and multiple expansion back toward the upper end of the historical PB band; the low target of $43.00 implies just +3.8% upside and prices in margin pressure, higher financing costs, or a slower regulatory environment. Institutional ratings show a stable-to-improving pattern: Jefferies upgraded to Buy from Hold on 2025-10-31, while Wells Fargo (Overweight), Barclays (Overweight), UBS (Buy), and Mizuho (Outperform) have maintained constructive ratings through 2026, with Citigroup and Evercore ISI remaining Neutral/In Line. The absence of any downgrades in the recent ratings history is a positive signal, and the concentration of Overweight/Buy ratings from major banks suggests the institutional consensus expects the current valuation disconnect to resolve in shareholders' favor.
Bulls vs Bears: NI Investment Factors
The bear case currently has stronger near-term evidence, with NI down 12.62% over six months, deeply negative free cash flow of -$832 million, and a debt-to-equity ratio of 1.72x. However, the bull case rests on a compelling valuation disconnect: analysts see +20.4% upside to their $49.86 average target, revenue is growing at 8.24% year over year, and the forward PE of 18.38x is reasonable for a regulated utility with mid-single-digit growth. The single most important tension is whether the aggressive capex cycle will convert into positive free cash flow and rate-base growth before financing strain or a adverse rate-case outcome forces a dividend cut or equity issuance. If the capex program delivers, the stock is materially undervalued; if it stalls, the premium PB multiple of 2.09x could compress sharply.
Bullish
- Analyst consensus sees 20% upside: 14 analysts rate NI a Buy with a mean recommendation of 1.6, and the average target price of $49.86 implies +20.4% upside from the current $41.41. The high target of $55.00 implies +32.8% upside, and no downgrades have appeared in the recent ratings history, with Jefferies upgrading to Buy in October 2025.
- Revenue growth accelerating at 8.2% YoY: Q1 2026 revenue of $2.363 billion rose 8.24% versus Q1 2025's $2.183 billion, a healthy pace for a regulated utility. Gross margin expanded 873 basis points year over year to 59.48%, reflecting favorable rate recovery and cost management.
- Defensive low-beta income profile: NI's beta of 0.54 makes it roughly 46% less volatile than the broader market, ideal for risk-averse investors. The 2.69% dividend yield and 57.06% payout ratio are sustainable for a regulated utility with predictable rate-base cash flows.
- Valuation near middle of utility band: The forward PE of 18.38x sits near the middle-to-upper end of the historical 16-20x utility sector range, while the PEG ratio of 1.05 suggests growth is priced at fair value. The trailing PE of 21.31x versus forward PE of 18.38x implies the market expects meaningful earnings growth.
Bearish
- Deep negative free cash flow of -$832M: TTM free cash flow is -$832 million, with Q1 2026 capex of $805.2 million against operating cash flow of just $442.3 million. This forces reliance on external financing, as evidenced by Q1 2026 net cash from financing of +$358.2 million including $549.1 million of debt repayment.
- Elevated leverage and tight liquidity: Debt-to-equity of 1.72x is elevated for a utility, and the current ratio of 0.69 signals tight near-term liquidity. Interest expense rose to $191.6 million in Q1 2026 from $132.8 million in Q1 2025, a 44% increase that pressures net income.
- Severe relative underperformance: NI has underperformed SPY by -28.02% over 6 months and -15.54% over 1 year, while the market gained 16.22% over the past year. The stock is down 12.62% over 6 months and 12.29% over 3 months, sitting at just 21.3% of its 52-week range.
- Price-to-book near historical peak: The PB ratio of 2.09x is near the top of its historical range of roughly 1.35x to 2.31x, well above the 1.48x at Q4 2022. If rate-base growth stalls, multiple compression toward the 1.5-1.7x historical mid-range would imply meaningful downside.
NI Technical Analysis
NiSource is in a clear intermediate-term downtrend despite a modestly positive one-year return of +0.68%, with the stock having fallen from a 52-week high of $49.21 to a current price of $41.41, which places it at just 21.3% of its 52-week range (range width of $9.91). The 6-month change of -12.62% and 3-month change of -12.29% confirm that the bulk of the damage occurred since mid-2026, while the 1-year figure remains barely positive only because of strength in late 2025 and early 2026. Trading in the lower quartile of the annual range signals that momentum has broken down and that the stock is closer to a value/oversold zone than to overextension, though the persistent slide argues against catching the proverbial falling knife without stabilization evidence. Recent momentum is decisively negative and decelerating: the 1-month change of -1.38% is less severe than the 3-month -12.29%, suggesting the pace of decline is moderating, but the 1-year +0.68% versus 3-month -12.29% divergence is a classic trend-reversal signal rather than a mere pullback. Relative strength versus SPY is deeply negative across every window — -0.32% over 1 month, -15.33% over 3 months, -28.02% over 6 months, and -15.54% over 1 year — meaning NiSource has massively underperformed a market that gained 16.22% over the past year, a stark divergence for a defensive utility. The 1-month relative strength of -0.32% is the least bad reading, hinting that the underperformance may be stabilizing even as absolute price remains weak. Key technical levels are well defined: support sits at the 52-week low of $39.30, roughly 5.1% below the current $41.41, while resistance is the 52-week high of $49.21, about 18.8% above. A breakdown below $39.30 would likely trigger momentum-driven selling and open a deeper correction, whereas a reclaim of the $45-$46 area (the July consolidation zone) would be the first sign of a durable bottom; the maximum drawdown of -17.34% shows the stock has already endured a meaningful correction. With a beta of 0.54, NiSource is roughly 46% less volatile than the broader market, which supports smaller position-sizing adjustments and makes the current drawdown more a function of stock-specific utility sentiment than broad market beta.
Beta
0.54
0.54x market volatility
Max Drawdown
-17.3%
Largest decline past year
52-Week Range
$40-$49
Price range past year
Annual Return
+1.0%
Cumulative gain past year
| Period | NI Return | S&P 500 |
|---|---|---|
| 1m | -2.5% | -1.0% |
| 3m | -14.1% | +2.0% |
| 6m | -9.9% | +17.4% |
| 1y | +1.0% | +15.0% |
| ytd | -3.7% | +11.7% |
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NI Fundamental Analysis
NiSource's revenue trajectory is lumpy but fundamentally growing: Q1 2026 revenue of $2.363 billion rose 8.24% year over year versus Q1 2025's $2.183 billion, and the sequential pattern shows Q4 2025 at $1.903 billion and Q3 2025 at $1.273 billion, reflecting the strong seasonal heating-demand skew typical of a gas utility. The year-over-year comparison is the more meaningful signal, and the 8.24% growth rate is healthy for a regulated utility, supported by rate increases and capital investment recovery. However, the quarterly cadence is highly uneven — Q1 2026 revenue of $2.363 billion is 85.7% higher than Q3 2025's $1.273 billion — so investors should focus on the annualized run-rate rather than sequential noise. The single disclosed segment, Corporate and Other, at $140.1 million, is immaterial to the consolidated picture, meaning the core regulated gas and electric businesses are the entire story. Profitability is solid and improving at the operating line: Q1 2026 net income was $507.1 million on a 21.46% net margin, with gross margin of 59.48% and operating margin of 34.67%, versus Q1 2025 net income of $474.8 million and a 21.75% net margin. The year-over-year net income increase of 6.8% ($507.1M vs. $474.8M) slightly lagged the 8.24% revenue growth, indicating modest margin compression at the net level, though gross margin expanded from 50.75% in Q1 2025 to 59.48% in Q1 2026 — a 873 basis point improvement that reflects favorable rate recovery and cost management. The TTM net margin of 13.99% and gross margin of 50.40% are consistent with regulated utility economics, and the Q1 seasonal peak (net margin above 21%) versus Q3 trough (7.44% in Q3 2025) underscores the weather-driven earnings seasonality. Balance sheet and cash flow present the key risk: debt-to-equity of 1.72x is elevated for a utility, the current ratio of 0.69 signals tight near-term liquidity, and TTM free cash flow is deeply negative at -$832 million due to capital expenditure of $805.2 million in Q1 2026 alone against operating cash flow of just $442.3 million. ROE of 9.84% and ROA of 3.24% are respectable for a regulated utility but below the 10-12% ROE typically targeted by utility managements, and the negative FCF means NiSource depends on external financing — Q1 2026 net cash from financing was +$358.2 million, including $549.1 million of debt repayment and $149 million of dividends paid. The dividend payout ratio of 57.06% and dividend yield of 2.69% are sustainable only if rate-base growth eventually converts to positive FCF, making the capex cycle the central fundamental swing factor.
Quarterly Revenue
$2.4B
2026-03
Revenue YoY Growth
+8.2%
YoY Comparison
Gross Margin
59.5%
Latest Quarter
Free Cash Flow
$-831999999.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is NI Overvalued?
Because NiSource is profitable — Q1 2026 net income of $507.1 million and positive trailing EPS — the PE ratio is the appropriate primary metric, and the stock trades at a trailing PE of 21.31x versus a forward PE of 18.38x. The 13.8% gap between trailing and forward multiples implies the market expects meaningful earnings growth over the next twelve months, consistent with the analyst consensus EPS estimate of $3.01 versus the current run-rate, and the PEG ratio of 1.05 suggests that growth is being priced at roughly fair value relative to the earnings expansion rate. The forward PE of 18.38x is the more relevant anchor for a regulated utility with mid-single-digit growth, and it sits in a reasonable range rather than signaling extreme optimism. On peer comparison, the data provided does not include a direct industry-average PE for the Regulated Gas sector, so a precise premium/discount spread cannot be quantified; however, the broader utility sector has historically traded in the 16-20x forward earnings range, placing NiSource's 18.38x forward PE near the middle-to-upper end of that band. The price-to-book ratio of 2.09x and price-to-sales of 2.97x are moderate, while the EV/EBITDA of 11.77x and EV/Sales of 5.75x reflect the capital-intensive, leveraged nature of the business. The 2.69% dividend yield is below the 3-4% range typical of large-cap regulated utilities, which is consistent with a premium valuation justified by above-average rate-base growth but leaves less income cushion if the capex program underdelivers. Historically, NiSource's PE has been highly volatile due to seasonal earnings: the trailing PE ranged from 8.92x in Q1 2024 to 54.12x in Q3 2025, with the Q1 2026 reading of 11.00x reflecting peak seasonal earnings. On a price-to-book basis, the current 2.09x compares to a historical range of roughly 1.35x (Q4 2023) to 2.31x (Q1 2026), placing the stock near the top of its own book-value band — a level that historically has coincided with optimistic rate-base growth expectations. The current PB of 2.09x is above the 1.99x reading at Q4 2024 and well above the 1.48x at Q4 2022, suggesting the market is pricing in continued capital deployment and earnings accretion; if that growth stalls, multiple compression toward the 1.5-1.7x historical mid-range would imply meaningful downside.
PE
21.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 8x~68x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.8x
Enterprise Value Multiple
Investment Risk Disclosure
NiSource faces significant financial and operational risks stemming from its capital-intensive business model. TTM free cash flow is deeply negative at -$832 million, with Q1 2026 capex of $805.2 million dwarfing operating cash flow of $442.3 million, forcing the company to rely on external financing. Debt-to-equity of 1.72x is elevated for a regulated utility, and the current ratio of 0.69 signals tight near-term liquidity, while interest expense jumped 44% year over year to $191.6 million in Q1 2026. The dividend payout ratio of 57.06% leaves limited margin for error if rate-case outcomes are unfavorable or capex overruns occur. Additionally, revenue is concentrated in regulated gas distribution across five states plus Indiana electric operations, exposing the company to weather-driven demand volatility and regulatory decisions in each jurisdiction.
Market and competitive risks are amplified by NiSource's premium valuation relative to its own history. The price-to-book ratio of 2.09x is near the top of its historical range of roughly 1.35x to 2.31x, and the forward PE of 18.38x sits in the middle-to-upper end of the 16-20x utility sector band. If rate-base growth disappoints, multiple compression toward the 1.5-1.7x historical PB mid-range would imply substantial downside. The stock's beta of 0.54 provides some insulation from broad market volatility, but its -28.02% relative underperformance versus SPY over six months shows that utility-specific sentiment has turned negative. Regulatory headwinds, including adverse rate-case rulings or delays in the Indiana generation transition, could further pressure the shares, and the absence of recent news means the market is pricing in uncertainty without a clear catalyst.
The worst-case scenario would involve a combination of adverse regulatory outcomes, rising financing costs, and a dividend cut. If rate cases in key jurisdictions deliver lower-than-requested returns, capex overruns force additional debt issuance at higher rates, and the company cuts its dividend to preserve cash, the stock could fall to its 52-week low of $39.30, representing a -5.1% decline from the current $41.41. A more severe outcome, such as a credit rating downgrade triggering forced selling, could push the stock below the 52-week low toward the analyst low target of $43.00, though that target is above the current price. The maximum drawdown of -17.34% shows the stock has already endured a meaningful correction, but a breakdown below $39.30 would likely open a deeper correction toward the $35-37 range, implying a potential loss of -10% to -15% from current levels.
FAQ
The most severe risk is financing strain from negative free cash flow of -$832 million and a debt-to-equity ratio of 1.72x, which could force a dividend cut or dilutive equity issuance if capex overruns. Regulatory risk is also significant, as adverse rate-case outcomes in Indiana or Pennsylvania could reduce allowed returns and pressure earnings. Market risk includes the stock's -28.02% relative underperformance versus SPY over six months, which could continue if utility sentiment remains negative. Finally, interest rate risk is elevated because the company's heavy debt load means rising rates increase interest expense, which already jumped 44% year over year to $191.6 million in Q1 2026.
The 12-month forecast is base-case weighted, with a 55% probability that NI trades between $43.00 and $49.86, a 25% probability of a bull-case move to $49.86-$55.00, and a 20% probability of a bear-case decline to $39.30-$43.00. The base case assumes revenue growth of 5-8%, no dividend cut, and a stable regulatory environment, with the stock supported by the analyst average target of $49.86. The bull case requires successful capex execution and positive free cash flow inflection, while the bear case is triggered by adverse rate cases or a credit downgrade. The most likely scenario is a gradual recovery toward the mid-$40s as earnings grow in line with the consensus EPS of $3.01.
NI appears fairly valued to slightly undervalued relative to its growth prospects. The forward PE of 18.38x sits in the middle-to-upper end of the 16-20x utility sector range, while the PEG ratio of 1.05 suggests growth is priced at fair value. The price-to-book ratio of 2.09x is near the top of its historical range of 1.35x to 2.31x, indicating the market is pricing in continued capital deployment and earnings accretion. Compared to the analyst average target of $49.86, the current price of $41.41 implies a 20.4% discount, suggesting the market is overly pessimistic about the company's ability to execute. However, if rate-base growth stalls, multiple compression toward the 1.5-1.7x historical PB mid-range would imply meaningful downside.
NI offers a mixed risk/reward proposition. On the positive side, 14 analysts rate it a Buy with a $49.86 average target, implying +20.4% upside, and the forward PE of 18.38x is reasonable for a regulated utility with 8.24% revenue growth. However, the stock has fallen 12.62% over six months, trades at just 21.3% of its 52-week range, and carries -$832 million in trailing free cash flow with a 1.72x debt-to-equity ratio. For income-oriented investors with a long horizon, the 2.69% dividend yield and low beta of 0.54 make it a defensive holding, but the negative cash flow means it is not a screaming buy. It is a good buy only if you believe the capex cycle will convert to positive free cash flow and rate cases will be constructive.
NI is best suited for long-term investment, with a suggested minimum holding period of 2-3 years to allow the capital investment program to drive rate-base growth and free cash flow improvement. The stock's beta of 0.54 and 2.69% dividend yield make it a defensive income vehicle, not a short-term trading instrument, and the negative free cash flow means near-term volatility is likely. The 57.06% payout ratio and regulated business model provide earnings visibility, but the current downtrend and -12.62% six-month decline suggest that short-term traders face significant momentum risk. Long-term investors can collect the dividend while waiting for the capex cycle to mature and the valuation disconnect to resolve.