NiSource Inc (NI)

Conclusion

NiSource is a US energy holding company that runs regulated natural gas distribution and electric operations in northern Indiana. At 45.06 USD on 2026-11-09, its market capitalisation is 21.6 billion USD and its enterprise value is 39.8 billion USD.

The verdict is fair. The price-to-earnings ratio of 23.0 and the EV-to-EBITDA ratio of 12.1 sit close to their ten-year medians of 23.0 and 12.2. The fair value band runs from 31.59 to 47.38 USD with a midpoint of 39.48 USD, giving a margin of safety of -12.4% at the current price. The fair value from historical multiples is 39.48 USD. A discounted cash flow value per share is not available because free cash flow is negative, and no reverse DCF is available. The growth the price implies therefore cannot be set against delivered growth. Revenue compounded at 7.3% over five years and EPS at 2.6% over three years, and analysts expect EPS to grow 9.6% next year.

The case rests on operating margin of 27.4%, against a ten-year median of 19.9%, and on a Beneish M-score of -2.37, which reads as unlikely manipulation. The weakest numbers are free cash flow conversion of -166.7% on a trailing twelve-month basis, net debt to EBITDA of 5.5x and interest coverage of 2.4x. An Altman Z-score of 0.75 sits in the distress zone.

Financial health

Financial health is red, because all four liquidity and leverage measures are assessed as bad. The current ratio is 0.50, the quick ratio 0.19, net debt to EBITDA 5.5x, and interest coverage 2.4x, while debt to equity stands at 1.9. The Altman Z-score is 0.75, in the distress zone, but that model was designed for manufacturers, so for a regulated utility it is indicative only. Insolvency risk: low, about 1.1% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is red, mainly because free cash flow is negative: conversion is -166.7% on a trailing twelve-month basis and -89.8% over five years, and free cash flow after stock-based compensation is -1.62 billion USD. The accrual ratio is -4.2% and stock-based compensation is 0.7% of revenue. The share count grew at 4.3% a year over five years, so this is dilution rather than buybacks. The Piotroski score is 6 of 9 and the Beneish M-score of -2.37 is unlikely. The company beat estimates in 6 of the last 8 quarters, with an average surprise of 4.8%. Estimate revisions lean negative: over the last 30 days, 4 current-year estimates went down against 2 up, and 5 next-year estimates went down against 4 up.

Profitability

Profitability is green, with margins above their ten-year medians: gross margin is 50.7% against 42.2%, operating margin 27.4% against 19.9%, and net margin 13.5% against 9.7%. Operating margin stability is 37.1%. ROIC is 5.95% against a WACC of 6.69%, a ROIC minus WACC value of -0.7%, labelled neutral, and the five-year median ROIC is 5.65%. Return on equity is 9.8%. The DuPont split shows a net margin of 14.0%, an asset turnover of 0.18 and an equity multiplier of 3.87 at the end of 2025. Leverage lifts the return on equity, so ROIC is the more reliable measure of return here.

Growth

Growth is yellow. Revenue compounded at 4.3% over three years, 7.3% over five years and 3.6% over ten years. EPS compounded at 2.6% over three years and 8.1% over ten years. Revenue grew in 6 of the 10 comparable years. The EPS growth estimate for next year is 9.6%, which is the strongest growth figure in the set, though it has not yet been delivered.

Valuation

Valuation is yellow. Against their own ten-year medians, the price-to-earnings ratio of 23.0 carries a premium of -0.2% and EV-to-EBITDA of 12.1 a premium of -0.3%. Price-to-sales of 3.1 carries a premium of 53.8% over its median of 2.0, and price-to-book of 2.3 a premium of 33.2% over 1.7. The free cash flow yield is -7.3% and the earnings yield 4.4%. A discounted cash flow value per share is not available because free cash flow is negative; the discount rate used is 8.9% with terminal growth of 2.5%. The fair value band runs from 31.59 to 47.38 USD, with a midpoint of 39.48 USD. The dividend yield is 2.6% and the forward yield 2.7%, but negative free cash flow means the dividend is not covered by free cash flow.

Risks

Negative free cash flow means the company spends more than it generates and relies on borrowing and new shares. With net debt at 5.5x EBITDA and interest coverage at 2.4x, higher rates or tighter credit would squeeze earnings quickly. A current ratio of 0.50 means short-term obligations exceed liquid assets. Share count growth of 4.3% a year dilutes value per share, and ROIC below WACC means growth adds little value at present. Not available: the discounted cash flow value per share, the reverse DCF, a debt maturity schedule and revenue by segment. The fair value band rests on fixed assumptions, including a 5% equity risk premium and capped growth. It is an order-of-magnitude estimate, not a price target.