NiSource
NI
$43.60
+0.37%
NiSource Inc. is a regulated utility holding company and one of the largest pure-play natural gas distribution businesses in the United States, serving roughly 2.4 million 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 about 4 gigawatts of coal, gas, and renewable generation. Its identity is that of a low-beta, rate-regulated infrastructure operator rather than a growth or technology story — returns are driven by approved rate base growth, capital investment programs, and regulatory outcomes rather than volume or pricing power. The current investor debate centers on the company's multi-year capital spending plan and the associated negative free cash flow (roughly -$1.09 billion on a trailing basis) that requires continual debt and equity funding, set against a constructive regulatory backdrop in Indiana and Ohio and a 2.7% dividend yield that anchors income-oriented holders. Recent quarterly results showed modest 4.6% year-over-year revenue growth but a sharp sequential drop in Q2 net income to $45.5 million from $507.1 million in Q1, reflecting the seasonal gas-heating earnings pattern, while the stock's 10.3% one-month rally against a -1.3% one-year return has revived the question of whether the utility is finally re-rating or simply mean-reverting after a difficult stretch.…
NI
NiSource
$43.60
Investment Opinion: Should I buy NI Today?
NiSource receives a Hold rating. The core thesis is that the stock offers a stable, regulated utility business with a 2.69% dividend yield and analyst consensus target of $48.09 (11.1% upside), but the negative free cash flow of -$1.086 billion and high leverage (debt-to-equity 1.72x) limit upside until the capital program shows tangible returns. The analyst consensus rating is 'buy' with a mean of 1.65, reflecting confidence in the regulated model. Supporting evidence includes a forward PE of 19.28x, which is reasonable for a utility, and a PEG ratio of 1.05 indicating the stock is fairly valued relative to growth. Revenue growth of 4.63% YoY is modest but stable, and the gross margin of 50.4% is healthy. However, the negative FCF and 1.15x interest coverage are concerns. The dividend is covered by earnings (payout ratio 57.1%) but not by free cash flow, meaning it relies on external financing. The biggest risks are regulatory lag, rising interest rates, and execution on the capex program. The rating would upgrade to Buy if free cash flow turns positive or if the P/B multiple compresses below 1.8x, and downgrade to Sell if the dividend is cut or if interest coverage falls below 1.0x. Relative to its history, the stock is overvalued on a P/B basis (2.09x vs. historical 1.35-1.7x), but fairly valued on a PE basis (21.3x trailing, 19.3x forward). Therefore, the stock appears fully valued with limited margin of safety.
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NI 12-Month Price Forecast
NiSource presents a balanced risk/reward profile. The regulated utility model provides stable earnings and a secure dividend, but the company's aggressive capital program and negative free cash flow require constant external financing, leaving little room for error. The stock's valuation is full on a P/B basis, and the recent rally may have priced in much of the near-term optimism. The analyst consensus is bullish, but the market has been skeptical, as shown by the one-year underperformance. We would upgrade to bullish if free cash flow turns positive or if the stock pulls back to a more attractive valuation (P/B below 1.8x). We would downgrade to bearish if regulatory outcomes disappoint or if interest coverage deteriorates further.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on NiSource's 12-month outlook, with a consensus price target around $47.72 and implied upside of +9.4% versus the current price.
Average Target
$47.72
0 analysts
Implied Upside
+9.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$43 - $52
Analyst target range
Coverage is robust with 16 analysts, and the consensus is clearly bullish: the recommendation is "buy" with a mean rating of 1.65 (where 1.0 is a strong buy and 5.0 a strong sell), and the average target price of $48.09 implies +11.1% upside from the current $43.28. The consensus EPS estimate of $3.006 (range $2.924 to $3.091) and revenue estimate of $9.428 billion (range $9.230 billion to $9.634 billion) are tightly clustered, indicating high confidence in the regulated earnings stream, and the target sits just below the 52-week high of $49.21, suggesting analysts see the stock recovering toward its prior peak rather than breaking into new territory. The bullish tilt is reinforced by the institutional ratings flow: BMO Capital, Mizuho, Ladenburg Thalmann, Barclays, KeyBanc, and Wells Fargo have all reiterated Outperform/Overweight/Buy ratings through 2026, with Citigroup the lone Neutral — no downgrades appear in the recent record. The target range of $43.00 to $52.00 is moderately wide (about 21% from low to high), and notably the low target of $43.00 is essentially the current price, meaning even the most cautious analyst sees no downside from here. The high target of $52.00 implies roughly 20% upside and would require multiple expansion toward the top of the historical P/B band plus successful execution on rate cases and capex recovery; the low target of $43.00 prices in a flat-to-modest outcome where financing costs and regulatory lag offset rate base growth. The tight clustering of EPS estimates and the absence of recent downgrades signal strong conviction in the regulated model, though the stock's -14.47% one-year relative strength versus SPY shows the market has been slower than analysts to reward it — a gap that the recent +10.27% one-month rally may finally be closing.
Bulls vs Bears: NI Investment Factors
The bull case for NiSource rests on its regulated business model, strong analyst consensus (16 analysts, mean rating 1.65, average target $48.09), and a safe dividend yield of 2.69%. However, the bear case is equally compelling: negative free cash flow of -$1.086 billion, high leverage (debt-to-equity 1.72x), and a valuation (P/B 2.09x) that already prices in optimistic regulatory outcomes. The most important tension is whether the company's capital investment program will earn sufficient returns to justify the external financing and leverage, or whether regulatory lag and rising interest costs will compress margins and valuation. Currently, the bear evidence appears slightly stronger given the stretched balance sheet and negative FCF, but the recent momentum and analyst optimism suggest a balanced risk/reward.
Bullish
- Analyst consensus strongly bullish: 16 analysts rate NI a 'buy' with a mean rating of 1.65 (1=strong buy, 5=strong sell) and an average target of $48.09, implying +11.1% upside from $43.28. Even the lowest target of $43.00 is essentially at the current price, indicating analysts see no downside.
- Regulated rate base growth supports earnings: Revenue grew 4.63% YoY in Q2 2026 to $1.342 billion and 8.2% in Q1 2026 to $2.363 billion, driven by approved rate increases and customer additions. This stable, regulated growth underpins a low-to-mid single-digit earnings growth trajectory.
- Attractive dividend yield with safe payout: NI offers a 2.69% dividend yield with a 57.1% payout ratio, which is well covered by earnings and competitive with the 10-year Treasury. This provides a steady income stream for utility investors.
- Recent momentum inflection: The stock has rallied 10.27% in the past month, outperforming the S&P 500 by 11.29 percentage points, reversing a -7.28% three-month decline. This suggests a potential mean-reversion recovery from oversold levels.
Bearish
- Negative free cash flow requires external funding: Trailing free cash flow is -$1.086 billion, with Q2 2026 FCF of -$417 million after $1.097 billion of capex against $680.4 million of operating cash flow. The company relies on debt and equity issuance to fund its capital program, diluting shareholders and increasing leverage.
- High leverage and weak interest coverage: Debt-to-equity is 1.72x and total debt to capitalization is 64.7%, with a current ratio of 0.688 indicating limited liquidity. Interest expense of $199.2 million in Q2 consumed nearly half of operating income of $228.1 million, resulting in interest coverage of just 1.15x.
- Valuation near historical highs on book value: The price-to-book ratio of 2.09x is near the top of its multi-year range, up from 1.35x at year-end 2023, despite a 9.84% ROE that is below the cost of equity. This suggests the market is pricing in optimistic regulatory outcomes.
- Relative underperformance versus market: NI has lagged the S&P 500 by 14.47 percentage points over the past year, with a -1.34% return versus +13.13% for the index. The stock's -20.54% max drawdown reflects significant volatility despite its low beta.
NI Technical Analysis
NI is in a recovery phase within a broader range-bound consolidation, with the current price of $43.28 sitting at approximately 45.4% of its 52-week range of $38.42 to $49.21 — closer to the lower half than the highs. The one-year price change of -1.34% versus the S&P 500's +13.13% (a relative strength of -14.47%) confirms the stock has been a meaningful laggard, and the -20.54% max drawdown over the period shows how deeply the shares corrected from their highs before stabilizing. Positioning at this level of the range means the stock is neither an overextended momentum name nor a falling knife; it is a value-recovery candidate that has already absorbed most of its downside. Recent momentum is decisively positive and diverging from the longer-term trend: the one-month change of +10.27% compares with a three-month change of -7.28% and a six-month change of -9.81%, meaning the stock has reversed sharply off its late-September lows near $39.00. That +11.29% one-month relative strength versus SPY is a genuine inflection signal, though the year-to-date gain of just +2.66% (versus SPY +11.45%) shows the recovery has only clawed back part of the underperformance. The move from $39.00 on September 30 to $43.28 on October 23 — roughly 11% in under four weeks — is steep enough that short-term consolidation or a pullback toward the $41-42 area would be normal. Key technical levels are clear: support sits at the 52-week low of $38.42, with secondary support around the $39.00-40.00 October base, while resistance is the 52-week high of $49.21, with intermediate resistance near $45-46 where the stock traded in July before breaking down. A breakout above $49.21 would signal a full trend reversal and likely invite momentum and income funds back in, whereas a breakdown below $38.42 would confirm the downtrend and target new lows. The beta of 0.548 is the critical risk-management input — the stock is roughly 45% less volatile than the market, which means position sizing can be larger for a given risk budget, but it also means the stock will lag in strong risk-on rallies, exactly as the -14.47% one-year relative strength demonstrates.
Beta
0.55
0.55x market volatility
Max Drawdown
-20.5%
Largest decline past year
52-Week Range
$38-$49
Price range past year
Annual Return
-0.3%
Cumulative gain past year
| Period | NI Return | S&P 500 |
|---|---|---|
| 1m | +10.6% | -0.2% |
| 3m | -2.7% | +5.5% |
| 6m | -9.7% | +7.1% |
| 1y | -0.3% | +12.3% |
| ytd | +3.4% | +12.9% |
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NI Fundamental Analysis
Revenue is growing but at a modest, regulated-utility pace: Q2 2026 revenue of $1.342 billion rose 4.63% year over year from $1.283 billion in Q2 2025, while Q1 2026 revenue of $2.363 billion grew 8.2% from $2.183 billion in Q1 2025. The multi-quarter pattern is seasonal and stable rather than accelerating — Q4 2025 revenue of $1.903 billion and Q3 2025 revenue of $1.273 billion show the winter-weighted earnings profile typical of a gas distributor, with Q1 and Q4 carrying the heating load. The segment data is thin (only "Corporate and Other" at $140.1 million is broken out), so the growth story is best read through rate base expansion and capex rather than segment mix; the 4-5% top-line growth is consistent with approved rate increases and customer additions, which supports a low-single-digit to mid-single-digit earnings growth investment case rather than a high-growth one. Profitability is solid but compressed at the net line by heavy interest and depreciation: Q2 2026 net income of $45.5 million on a 3.39% net margin contrasts with Q1 2026's $507.1 million and 21.46% margin, again reflecting seasonality, while the trailing net margin of 13.99% and gross margin of 50.40% are healthy for a regulated utility. Operating margin of 27.58% is respectable, but interest expense of $199.2 million in Q2 alone against operating income of $228.1 million shows how leverage consumes nearly half of operating profit — interest coverage of just 1.15x in the Q2 historical ratios is a genuine constraint. Margins are broadly stable rather than expanding: gross margin has held in the 49-53% band across the last several quarters, and the path to higher ROE depends on rate case outcomes and capex earning a return, not on operating leverage. The balance sheet is the central fundamental issue: debt-to-equity of 1.72x, total debt to capitalization of 64.7%, and a current ratio of 0.688 indicate a leveraged, capital-intensive structure with limited short-term liquidity cushion. Free cash flow is deeply negative — -$1.086 billion trailing, with Q2 2026 FCF of -$417 million after $1.097 billion of capex against $680.4 million of operating cash flow — meaning the company cannot fund its growth program internally and depends on external financing, evidenced by $552.1 million of net cash from financing in Q2. ROE of 9.84% and ROA of 3.24% are modest but normal for a regulated utility, and the 2.69% dividend yield with a 57.1% payout ratio is covered by earnings but not by free cash flow, so the dividend is effectively financed alongside capex. The investment case therefore hinges on the regulatory compact: as long as rate base growth outpaces the cost of the debt and equity raised to fund it, the negative FCF is a feature of the growth model rather than a red flag.
Quarterly Revenue
$1.3B
2026-06
Revenue YoY Growth
+4.6%
YoY Comparison
Gross Margin
50.2%
Latest Quarter
Free Cash Flow
$-1.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is NI Overvalued?
Because NiSource is profitable (trailing net income positive, EPS of $0.047 on a quarterly basis and roughly $2.03 annualized), the PE ratio is the appropriate primary metric, and the trailing PE of 21.31x versus a forward PE of 19.28x implies the market expects modest earnings growth of about 10.5% over the next twelve months. The forward multiple of 19.28x against consensus EPS of $3.01 (versus the current run-rate) suggests analysts are modeling rate base growth and cost recovery, and the PEG ratio of 1.05 indicates the stock is priced roughly in line with its growth rate — neither cheap nor stretched on a growth-adjusted basis. The 2.97x PS ratio and 5.88x EV/Sales look elevated in isolation but are typical for a regulated utility with high revenue and heavy capital intensity, while the 11.77x EV/EBITDA is the more meaningful cross-check and sits in a reasonable range for the sector. Peer comparison is constrained by the absence of an explicit industry-average multiple in the provided valuation data, but the internal evidence is telling: a 2.09x price-to-book against a 9.84% ROE implies the market is paying roughly 2x book for a business earning below its cost of equity on a book basis, which is only justified if regulators allow returns on a growing rate base. The 2.69% dividend yield versus the 10-year Treasury is the key relative-value anchor for utility investors, and at current levels the yield is competitive but not compelling enough on its own to drive a re-rating. Historical context shows the stock is not cheap relative to its own recent band: the PE ratio has ranged from about 9.0x in Q1 2023 and Q1 2024 (seasonally high-earnings quarters) to over 100x in seasonally weak quarters, while the price-to-book ratio has climbed from roughly 1.35x at year-end 2023 to 2.09x today — near the top of its multi-year range. That P/B expansion from 1.35x to 2.09x, a roughly 55% increase, means the market has already re-rated the stock upward on book value even as the price has fallen over the past year, a divergence that reflects book value growth from retained earnings and equity issuance. The current valuation therefore prices in optimistic regulatory and capex execution; a disappointment on a rate case or a rise in financing costs would compress the P/B multiple back toward its 1.5-1.7x historical norm, implying 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 regulated model. The company's trailing free cash flow is deeply negative at -$1.086 billion, requiring continual debt and equity issuance to fund its capex program. Debt-to-equity stands at 1.72x with total debt to capitalization at 64.7%, and the current ratio of 0.688 indicates limited short-term liquidity. Interest coverage is thin at 1.15x in Q2 2026, with interest expense of $199.2 million consuming nearly half of operating income of $228.1 million, leaving little room for error if rates rise or regulatory outcomes disappoint. Additionally, earnings are highly seasonal, with Q2 net income of $45.5 million versus $507.1 million in Q1, which can lead to quarterly volatility. Market and competitive risks include valuation compression if the stock's premium P/B multiple of 2.09x reverts toward its historical norm of 1.5-1.7x. The stock has a beta of 0.548, making it less sensitive to market swings, but it has still underperformed the S&P 500 by 14.47 percentage points over the past year. Regulatory headwinds, such as adverse rate case outcomes or delays in cost recovery, could pressure margins and earnings. Additionally, rising interest rates increase the cost of the company's substantial debt and can make the dividend yield less attractive relative to Treasuries. The worst-case scenario involves a combination of a negative regulatory ruling, a spike in financing costs, and a market rotation away from utilities, leading to a sharp decline. The stock's 52-week low of $38.42 represents a potential downside of about 11.2% from the current price of $43.28. However, if the P/B multiple compresses to 1.5x, the downside could be more severe, potentially testing the low $30s. The max drawdown over the past year was -20.54%, indicating that a decline of over 20% is plausible in a stress scenario.
FAQ
The key risks include financial risks from high leverage (debt-to-equity 1.72x) and negative free cash flow (-$1.086 billion), which could strain the balance sheet if financing conditions worsen. Regulatory risks are significant, as adverse rate case outcomes could pressure margins and earnings. Market risks include interest rate sensitivity, as rising rates increase borrowing costs and make the dividend yield less attractive. Additionally, the stock's premium valuation (P/B 2.09x) could compress if growth disappoints. Operational risks include seasonal earnings volatility and dependence on capital investment returns. These risks are ranked from highest to lowest: financial, regulatory, market, and operational.
Our 12-month forecast for NI includes three scenarios: a bull case (25% probability) with a target range of $48-$52, a base case (55% probability) with a target range of $43-$48, and a bear case (20% probability) with a target range of $38.42-$43. The base case is most likely, assuming stable regulatory outcomes and steady earnings growth. The key assumption is that NiSource continues to execute its capital program without major setbacks, and interest rates remain relatively stable. The analyst average target of $48.09 aligns with our base case upper bound.
NI appears fairly valued to slightly overvalued on some metrics. The trailing PE of 21.31x and forward PE of 19.28x are in line with utility sector averages, and the PEG ratio of 1.05 suggests the stock is priced in line with its growth rate. However, the price-to-book ratio of 2.09x is near the top of its historical range (1.35-1.7x), indicating the market is paying a premium for the company's regulated growth prospects. The dividend yield of 2.69% is competitive but not exceptionally high. Overall, the valuation implies the market expects successful execution of the capital program and favorable regulatory outcomes, leaving little margin for error.
NI may be a good buy for income-focused investors seeking a stable dividend and low volatility, but it carries risks. The stock offers a 2.69% dividend yield and trades at a forward PE of 19.28x, with analyst consensus target of $48.09 implying 11.1% upside. However, the company has negative free cash flow of -$1.086 billion and high leverage (debt-to-equity 1.72x), which could limit upside. The recent 10.27% one-month rally suggests improving sentiment, but the stock still lags the market over the past year. For risk-averse investors with a long-term horizon, NI could be a suitable holding, but those seeking growth may find better opportunities elsewhere.
NI is more suitable for long-term investment, particularly for income-oriented investors. The regulated utility model provides predictable earnings and a stable dividend, but the negative free cash flow and high leverage mean the company needs time to execute its capital program and improve cash flow. The stock's low beta (0.548) reduces volatility, making it a defensive holding. Short-term trading is less attractive due to the stock's range-bound nature and sensitivity to interest rates. A minimum holding period of 2-3 years is recommended to allow for regulatory outcomes and capital investment returns to materialize.