NiSource (NI) recently completed a US$750 million fixed to floating rate note offering due in 2057, a long dated financing move that highlights its capital raising plans and long term funding approach.

Despite completing this long dated US$750 million note issue, NiSource’s recent share price performance has been soft, with the stock down 12.92% on a 30 day share price return and 14.37% on a 90 day share price return. However, the 3 year total shareholder return of 66.83% and 5 year total shareholder return of 94.01% still point to a much stronger longer term outcome.

Compare NiSource's recent bond move and share price pullback with other regulated utilities by scanning our hand picked 38 power grid technology and infrastructure stocks for potential balance sheet resilience and income stability candidates.

So is this US$750 million, long dated funding move a sign that NiSource’s underlying utility business is being priced too cautiously, or is the softer share price simply sentiment catching up with valuation?

Most Popular Narrative: 18.8% Undervalued

NiSource's most followed narrative pegs fair value at $50.03, compared with the latest close at $40.65, which frames the recent pullback in a different light.

Strong visibility into multi-year, rate-based capital expenditure ($19.4B base plan, plus $2B+ in upside/incremental projects) positions NiSource for 6 to 8% annual EPS growth and compound growth in regulated revenue.

Read the complete narrative. Read the complete narrative.

Want to see what sits behind that long term earnings path? The narrative leans on steady regulated growth, richer margins and a higher profit multiple. The mix of assumptions may surprise you.

Result: Fair Value of $50.03 (UNDERVALUED)

However, the NiSource narrative still faces real tests, including heavy gas system investment that could clash with decarbonization trends and potential setbacks in future rate approvals.

Another View on NiSource’s Valuation

The first narrative suggests NiSource is about 18.8% undervalued at $40.65 versus a fair value of $50.03. On simple P/E, the picture is less one sided. NiSource trades on 21.5x earnings, above the global Integrated Utilities average of 18.4x but below a peer average of 32x and a fair ratio of 23.2x. That mix points to some valuation support, yet also leaves less room if expectations slip. Which lens do you trust more when pricing a regulated utility with steady but moderate growth?

For a closer look at how this ratio based view stacks up against peers and the fair ratio the market could move toward over time, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With mixed sentiment around NiSource already clear, now is the time to check the underlying data yourself so you can form a balanced view. To see the specific issues and bright spots that investors are debating, start with these 3 key rewards and 3 important warning signs

Looking for more investment ideas beyond NiSource?

If NiSource has you thinking harder about your portfolio, now is the moment to line up a few fresh ideas so you are not caught short on options.

• Lock in potential stability by scanning companies with strong financial footing through our list of solid balance sheet and fundamentals (51 results).
• Hunt for value by reviewing companies that look attractively priced using the 49 high quality undervalued stocks.
• Strengthen your income stream by checking out potential high yield candidates in the 12 dividend fortresses.

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.