NiSource (NI) Q2 Earnings: Can The Stock Pull A Surprise?

Energy holding company NiSource Inc. (NYSE:NI) is set to report second-quarter 2016 results before the opening bell on Aug 2. Last quarter, the company posted a positive earnings surprise of 1.69%, bringing the trailing four-quarter average to 46.71%. Let’s see how things are shaping up for this announcement.

Factors at Play

NiSource’s systematic investments in infrastructure upgrades should drive its earnings and ability to serve its customers in an efficient manner. In 2016, the company plans to invest $1.4 billion as part of an ambitious long-term investment plan of $30 billion for utility infrastructure investment opportunities. Continued investments will allow the company to achieve the targeted earnings growth rate of 4–6%.

NiSource has a 100% regulated utility business model. A constructive regulatory environment in its service territories enables the company to continue making infrastructural investments. A decision on the Columbia Gas of Massachusetts' Gas System Enhancement Plan was issued by the Department of Public Utilities on Apr 29. This approval will increase annual revenues by nearly $8.2 million which will positively impact the top line in the to-be reported quarter.

NISOURCE INC Price and EPS Surprise

NISOURCE INC Price and EPS Surprise | NISOURCE INC Quote

Earnings Whispers

Our proven model does not conclusively show that NiSource is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat consensus estimates. However, that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 6 cents.

Zacks Rank: NiSource currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

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

Stocks to Consider

Here are some stocks in the utility-electric power space that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this season:

Avista Corp. (NYSE:AVA) has an Earnings ESP of +2.33% and a Zacks Rank #2. The company is expected to release second-quarter results on Aug 3, before the market opens.

CMS Energy Corporation (NYSE:CMS) has an Earnings ESP of +11.43% and a Zacks Rank #2. The company is expected to release second-quarter results on Jul 28, before the market opens.

Pattern Energy Group, Inc. (NASDAQ:PEGI) has an Earnings ESP of +100.00% and a Zacks Rank #2. The company is expected to release second-quarter results on Aug 5, before the market opens.