NiSource Tops EPS Estimates And Lifts Long-Term Growth Outlook Again As Microsoft Joins GenCo, Though Revenue Misses

NiSource delivered third-quarter earnings of $0.27 per share, beating the $0.22 consensus by 22.7% and growing 42.1% year over year. Revenue of $1.349 billion rose 6.0% but missed the $1.39 billion consensus by 2.9%. The quarter itself, however, was not the main story. Management used the report to reset the long-term outlook. It extended the capital plan to 2033, initiated 2027 guidance, signed Microsoft as a third data center customer, and raised its consolidated EPS growth target for the second time this year. For a regulated utility, that is an unusually aggressive step-up, and it overshadows the revenue shortfall.

The quality of the beat holds up well. GAAP and adjusted EPS were both $0.27, and third-quarter adjustments were minor: a $6.0 million Value Captured charge partly offset by a $4.0 million weather benefit. This was not a number built on exclusions. The year-over-year comparison also marks a clear reacceleration. Second-quarter adjusted EPS fell to $0.16 from $0.22, hurt by storm costs and O&M tied to the April NIPSCO lockout. Q3 reversed that slide despite a higher diluted share count of 481.1 million versus 473.7 million. Year-to-date adjusted EPS is $1.49 versus $1.38. GAAP EPS is flat at $1.42, reflecting $21.4 million of lockout-related workplace continuity costs and restructuring charges that management excludes. With 2026 guidance narrowed to the upper half of $2.02-$2.07, the plan implies roughly $0.55-$0.58 in the fourth quarter.

The call showed improvement on nearly every axis. Usage and customer counts rose across NIPSCO, Ohio, Virginia and Kentucky. The GenCo strategy has moved from a single Amazon contract at year-end to three hyperscalers: Amazon, Alphabet and Microsoft. Signed capacity rose from about 4 GW to about 5 GW. Alphabet load is already energized and billing, and its transmission was completed ahead of schedule. The Microsoft agreement adds roughly 1,100 MW of combustion turbines and batteries under a 20-year term beginning in 2028.

The outlook has risen in steps all year:

• The consolidated EPS growth target has moved from 8%-9% to 9%-10% to 10%-11% for 2027-2033.
• GenCo's 2033 EPS target rose to 52-68 cents from 40-60 cents.
• 2027 guidance of $2.22-$2.30 includes $0.05-$0.09 from GenCo, and management is framing it as a double-digit growth year.
• The base plan's 6%-8% growth rate now runs through 2033.
• Projected customer savings climbed to $1.75 billion, or about $140 per residential customer annually, while the bill-increase target fell to below 4%. That pairing matters in states actively debating affordability.

Bears still have legitimate ammunition, and much of it is regulatory. The August 11 derecho, one of the most severe events in NIPSCO history, has triggered IURC reviews, legislative hearings and a third-party review, along with elevated storm O&M. Indiana and Pennsylvania are both running affordability proceedings that touch authorized returns, trackers and the DSIC mechanism. Those proceedings follow an adverse Indiana gas order in Q2. A fourth DOE 202 order keeps the Schahfer coal units running, with cost recovery dependent on FERC filings. Execution risk is also rising:

• The $40 billion plan is the largest construction program in company history.
• The new Microsoft generation package carries a $2.3 billion price tag.
• One Amazon combined-cycle plant slipped to 2030, though management says capex is unchanged.
• Near-term equity needs remain at $400-$600 million a year before tapering toward minimal levels by 2032.
• The negotiations bucket shrank from 3 GW to 2 GW as deals converted to signed contracts, leaving less visible backlog until the 2027 upsize study arrives.

The market had not priced in much enthusiasm before the report. Investor sentiment was essentially unchanged at a mildly negative -0.20, so expectations were cautious. Shares stood at $43.60 heading into the release, up just 1.5% from the open after the August report. That modest change hides a volatile quarter. The stock slid to a 52-week low of $38.42 on October 1, likely amid the derecho fallout and the financing-rate volatility management cited, then rallied 13.5% off that low. It entered earnings just 0.9% below its inter-earnings high but still 2.8% below its 200-day moving average of $44.85. The internal trend readings are largely neutral, with AVWAP positive, which fits a stock that has recovered rather than broken out.

The bottom line is that NiSource's quarter was clean and its outlook materially stronger, with the earnings beat, reaccelerating growth and a third hyperscaler all pointing the same way. The revenue miss matters little next to a 10%-11% long-term growth target. The real debate has shifted to whether Indiana and Pennsylvania regulators, still digesting the derecho and affordability concerns, will let that growth translate into earned returns. With sentiment still slightly negative and shares below their 200-day average, investors have not yet fully embraced the upgraded story.

Read our earnings preview for NiSource Inc.: https://www.earningswhispers.com/article/NI/20866

This earnings review was originally published on Earnings Whispers.

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