| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 16.50 | -62 |
| Intrinsic value (DCF) | 17.92 | -59 |
| Graham-Dodd Method | 6.10 | -86 |
| Graham Formula | 9.10 | -79 |
NiSource Inc. (LSE: 0K87.L) is a leading U.S.-based energy holding company operating as a regulated natural gas and electric utility. Headquartered in Merrillville, Indiana, NiSource serves approximately 2.4 million natural gas customers across Ohio, Pennsylvania, Virginia, Kentucky, and Maryland, along with 853,000 customers in northern Indiana. The company also provides electricity to 483,000 customers in northern Indiana through its Electric Operations segment. NiSource manages an extensive infrastructure, including 54,600 miles of distribution pipelines and 1,000 miles of transmission pipelines. Its diversified energy portfolio includes coal-fired, natural gas, hydro, and wind generation assets, totaling over 1,700 megawatts (MW) of capacity. As a key player in the General Utilities sector, NiSource is committed to sustainable energy transitions while maintaining reliable service for its residential, commercial, and industrial customers. With a history dating back to 1847, NiSource combines regulatory stability with strategic investments in cleaner energy solutions, positioning itself as a critical utility provider in the Midwest and Mid-Atlantic regions.
NiSource presents a stable investment opportunity within the regulated utility sector, supported by predictable cash flows and a strong dividend yield (currently $1.09 per share). The company's low beta (0.535) indicates relative resilience to market volatility, appealing to risk-averse investors. However, high total debt ($13.99B) and substantial capital expenditures ($2.61B) could pressure financial flexibility amid rising interest rates. Regulatory frameworks provide revenue stability, but transition risks loom as NiSource shifts from coal-fired generation (1,177MW capacity) toward renewables. The stock may suit income-focused investors, but growth depends on successful rate case approvals and infrastructure modernization.
NiSource competes in the highly regulated U.S. utility market, where scale and regulatory relationships are critical. Its Gas Distribution Operations segment benefits from geographic diversification across six states, reducing reliance on any single regulatory jurisdiction. The Electric Operations segment, however, is concentrated solely in Indiana, exposing it to state-specific policy risks. NiSource’s competitive advantage lies in its hybrid gas-electric model, which provides revenue diversification absent in pure-play utilities. The company’s 54,600-mile gas pipeline network creates high barriers to entry, but aging infrastructure requires ongoing capex. Compared to peers, NiSource lags in renewable energy penetration (only 409MW wind/hydro vs. 1,177MW coal), potentially increasing transition costs as decarbonization policies advance. Its $1.8B annual operating cash flow supports dividends but leaves limited room for aggressive renewable investments without rate hikes. Regulatory expertise is a strength, with 100% of earnings from regulated operations ensuring stability but capping upside potential. The company must balance infrastructure upgrades with customer affordability to maintain its 7.3% ROE (based on $758.8M net income).