NiSource Inc. NI benefits from rising demand from data centers, implementation of new rates and a clean energy initiative that will reduce the cost of operations by focusing on new and advanced assets. Its cost management will boost margins, and strategic capital investment will improve the reliability of its operation.
This Zacks Rank #2 (Buy) company faces risks from the aging infrastructure and project delays, which can increase costs and pressure margins.
NI’s Tailwinds
NiSource benefits from the implementation of new electric and gas rates, which came into effect in 2025, supporting its overall performance. The company’s Pennsylvania segment filed a rate case seeking more than $400 million to support investments that will help provide safe and reliable customer service delivery.
NI gains from rising electricity load growth to cater to data center demand. The company’s unit, NIPSCO Generation LLC (“GenCo”), signed 3 gigawatts (GW) of data center contracts and expects total demand to reach up to 9 GW. GenCo is negotiating over 3 GW and expects another 3 GW data center opportunities, boosting future growth prospects. NI has entered into a 3 GW data center contract with Amazon, passing benefits to its Indiana customers.
The company’s Project Apollo drives cost-saving initiatives and is expected to deliver annual cost savings of $40-$60 million. Revised plans limit average annual bill increases across NiSource to below 5%. The project plans to keep operations and maintenance expenses flat over the five-year plan. The company's systematic cost management will enhance operational efficiency, reduce expenses and boost the margin.
NiSource's strategic capital investment for infrastructure development enhances service reliability and supports long-term growth. The company plans a $28 billion investment for 2026-2030, including $21billion base investment plan and a $7 billion data center infrastructure investment, targeting 9-11% annual rate base growth through 2033.
NI’s Headwinds
Despite maintenance and investments, NiSource still faces risk related to failures of aging assets, which can adversely impact the operation and pressure margin.
The company is currently undertaking several capital projects, which include environmental and transmission projects. This project may face unexpected delays and raise capital costs, thereby postponing the realization of expected benefits.
Price Performance of NI
In the past three months, NiSource shares have rallied 12.9% compared with the industry’s 11.2% growth.
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Other Stocks to Consider
Some other top-ranked stocks in the same industry are CMS Energy CMS, CenterPoint Energy CNP and DTE Energy DTE. All stocks currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CMS, CNP and DTE have dividend yields of 2.90%, 2.11% and 3.14%, respectively, which are better than the Zacks S&P 500 composite’s yield of 1.47%.
The Zacks Consensus Estimate for CMS Energy, CenterPoint Energy and DTE Energy’s 2026 EPS is pegged at $3.86, $1.91 and $7.72, suggesting year-over-year growth of 6.93%, 8.52% and 4.89%, respectively.
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NiSource, Inc (NI): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).