NiSource (NI) Margins Tick Up as Profit Growth Trails Market Expectations, Reinforcing Cautious Investor Narratives

NiSource (NI) reported revenue growth of 5.3% per year and EPS growth projected at 7.9% annually, both trailing the broader US market rates of 10.3% and 15.9% respectively. Net profit margins saw a slight uptick to 14.1%, and the company’s high quality earnings are further underscored by an impressive five-year annual historical earnings growth rate of 28.2%. Despite these steady gains, shares trade at $42.11, above the estimated fair value of $34.03 and at somewhat elevated price-to-earnings multiples compared to the industry. This leads investors to weigh ongoing profitability against valuation concerns and risk factors.

See our full analysis for NiSource.

Now let's see how the hard numbers compare with the consensus narratives. We will look at whether the latest earnings reinforce or push back on the market’s prevailing storylines for NiSource.

See what the community is saying about NiSource

Margins Target 16.5% by 2027

• Analysts expect NiSource’s profit margins to climb from 14.4% today to 16.5% within three years, reflecting ongoing cost reductions from infrastructure upgrades and digital efficiencies.
• According to the analysts' consensus view, this margin expansion is boosted by:
  • AI-driven operational efficiency programs and digital asset management initiatives are reducing operating costs and minimizing leak risk. These efforts are projected to steadily widen net margins.
  • Regulatory-approved rate increases, such as the $297 million secured this quarter, enable NiSource to accelerate capital investments in grid and gas infrastructure. This further supports expanding profitability over the medium term.

Consistent improvements in core margins set the stage for the narrative that NiSource can harness operational changes into sustainable earnings growth. See what the community is saying about NiSource 📊 Read the full NiSource Consensus Narrative.

$19.4 Billion Capital Plan Powers Growth

• NiSource has committed to a $19.4 billion multi-year regulated infrastructure spending plan, plus over $2 billion in incremental projects, which analysts link directly to a projected 6–8% annual earnings per share increase.
• Analysts' consensus view underscores that:
  • This robust investment, much of it rate-based, gives strong visibility over future earnings and sets up long-term regulated revenue expansion as NiSource engages in grid and gas system modernizations.
  • Successful regulatory collaborations, such as those delivering timely rate hikes, enable the company to maintain high reinvestment while supporting both decarbonization and economic development opportunities in key service territories.

Share Price Holds Above DCF Fair Value

• The current share price of $42.11 sits notably above the DCF fair value of $34.03, and commands a price-to-earnings ratio of 22.5x, compared to the industry’s 18.2x average and the peer group’s 21.5x.
• Analysts' consensus narrative highlights some tension:
  • While the consensus price target ($43.91) is just 4.3% above the current market price, it suggests that investors are already pricing in optimistic assumptions, such as $6.8 billion revenue and $1.1 billion in earnings by 2028, along with a PE ratio of 23.0x, which is above industry norms.
  • The relatively small gap between the current share price and the consensus target indicates that the market views NiSource as fairly valued for now. Elevated valuation metrics and dependency on regulatory outcomes mean investors should scrutinize the underlying assumptions behind today’s pricing.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for NiSource on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your NiSource research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

While NiSource offers earnings growth and robust investment, its elevated share price and high price-to-earnings ratio make valuation a legitimate concern.

If you want more value for your investment, check out these 831 undervalued stocks based on cash flows for companies trading at more attractive prices based on their future cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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