Financial Analysis: NiSource (NI) versus Alliant Energy (LNT)

NiSource (NYSE: NI) and Alliant Energy (NYSE:LNT) are both mid-cap utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Profitability

This table compares NiSource and Alliant Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NiSource 3.85% 9.85% 2.18%
Alliant Energy 14.17% 11.41% 3.37%

Analyst Ratings

This is a summary of current recommendations for NiSource and Alliant Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NiSource 0 2 8 0 2.80
Alliant Energy 0 5 0 0 2.00

NiSource currently has a consensus target price of $26.44, indicating a potential upside of 9.00%. Alliant Energy has a consensus target price of $42.80, indicating a potential upside of 7.11%. Given NiSource’s stronger consensus rating and higher possible upside, analysts plainly believe NiSource is more favorable than Alliant Energy.

Valuation and Earnings

This table compares NiSource and Alliant Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NiSource $4.87 billion 1.68 $128.50 million $1.21 20.05
Alliant Energy $3.38 billion 2.73 $467.50 million $1.93 20.70

Alliant Energy has lower revenue, but higher earnings than NiSource. NiSource is trading at a lower price-to-earnings ratio than Alliant Energy, indicating that it is currently the more affordable of the two stocks.

Dividends

NiSource pays an annual dividend of $0.78 per share and has a dividend yield of 3.2%. Alliant Energy pays an annual dividend of $1.34 per share and has a dividend yield of 3.4%. NiSource pays out 64.5% of its earnings in the form of a dividend. Alliant Energy pays out 69.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Alliant Energy has increased its dividend for 12 consecutive years. Alliant Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

NiSource has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500. Comparatively, Alliant Energy has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500.

Institutional & Insider Ownership

89.2% of NiSource shares are owned by institutional investors. Comparatively, 72.6% of Alliant Energy shares are owned by institutional investors. 0.4% of NiSource shares are owned by insiders. Comparatively, 0.3% of Alliant Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Alliant Energy beats NiSource on 10 of the 17 factors compared between the two stocks.

NiSource Company Profile

NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. The company operates in two segments, Gas Distribution Operations and Electric Operations. It provides natural gas service and transportation to residential, commercial, and industrial customers; generates, transmits, and distributes electricity; and offers wholesale and transmission transaction services. The company serves approximately 3.5 million natural gas customers and 469,000 electricity customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana, and Massachusetts. It also owns and operates three coal-fired electric generating stations with a net capability of 2,540 megawatts (MW), three gas-fired generating units with a net capability of 196 MW, and two hydroelectric generating plants with a net capability of 10 MW, as well as a combined cycle gas turbine plant with a net capability of 535 MW. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1912 and is headquartered in Merrillville, Indiana.

Alliant Energy Company Profile

Alliant Energy Corporation operates as a utility holding company that provides regulated electricity and natural gas services in the Midwest region of the United States. It operates through three segments: Electric, Gas, and Other. The company, through its subsidiary, Interstate Power and Light Company (IPL), primarily generates and distributes electricity, and distributes and transports natural gas to retail customers in Iowa; sells electricity to wholesale customers in Minnesota, Illinois, and Iowa; and generates and distributes steam in Cedar Rapids, Iowa. Alliant Energy Corporation, through its subsidiary, Wisconsin Power and Light Company (WPL), generates and distributes electricity, and distributes and transports natural gas to retail customers in Wisconsin; and sells electricity to wholesale customers in Wisconsin. As of December 31, 2017, IPL supplied electricity to 490,000 retail customers and natural gas to 220,000 retail customers; and WPL supplied electricity to 470,000 retail customers and natural gas to 190,000 retail customers. It offers electric utility services to retail customers in the farming, agriculture, industrial manufacturing, chemical, and paper industries. In addition, the company holds investments in various businesses, which provide freight services through a short-line railway between Cedar Rapids and Iowa City, Iowa; a barge terminal and hauling services on the Mississippi River; and other transfer and storage services. Further, it owns a non-regulated 347 megawatt (MW) natural gas-fired electric generating unit near Sheboygan Falls, Wisconsin; and a non-regulated 99 MW Franklin County wind farm located in Franklin County, Iowa. Alliant Energy Corporation was founded in 1917 and is headquartered in Madison, Wisconsin.

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