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Will NiSource Beat Revenue Estimates in 2Q16?

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Nov. 20 2020, Updated 10:45 a.m. ET

NiSource’s sales in 2Q16

NiSource (NI) will report its 2Q16 results on August 2, 2016. According to analysts’ estimates, NiSource is expected to report revenue of $1 billion for the quarter.

In the same quarter last year, NiSource posted revenue of $1.5 billion. NiSource has missed analysts’ revenue expectations for the last four consecutive quarters.

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Revenue drivers

NiSource is a utility holding company with distribution operations spanning both the gas and electric segments. The electric segment has shown impressive growth in the last few quarters due to its lower operating expenses. The segment is likely to benefit from recent rate increases, which will increase its annual revenue by $72.5 million.

NiSource turned into a pure-play utility last year when it separated its pipeline business, Columbia Pipeline Group. Peers NextEra Energy (NEE), Dominion Resources (D), and CenterPoint Energy (CNP) kept interests in their pipeline businesses through MLPs. However, CenterPoint Energy is reviewing its stake in its Enable Midstream MLP (ENBL).

Mid-size regulated gas and electric utilities: Potential targets for M&A?

Mid-size regulated gas distribution utility holding companies are potential targets for utility giants’ inorganic growth. Bigger electric utilities are opening up for mergers and acquisitions (or M&A) in order to grow their gas distribution businesses.

NiSource’s valuations have risen due to its pure-play regulated profile and its strong earnings growth. It’s also seen significant contributions from its electric operations and its strong rate base growth.

NI’s peers AGL Resources, Questar (STR), and Piedmont Natural Gas (PNY) have been acquired by top US utilities.

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