NI or CNP: Which is a Better Utility Electric Power Stock?

Industry Overview - Utility service providers are benefiting from increased electricity tariffs, accretive acquisitions, cost reductions, and energy-efficiency initiatives [1] - The U.S. electric power sector is transitioning towards cleaner energy sources, with renewable energy expected to account for 25% of electricity generation in 2025 and 27% in 2026 [6] Infrastructure and Demand - Utility companies in the U.S. are enhancing their infrastructure for electricity generation, transmission, distribution, storage, and sales [2] - There is a significant surge in electricity demand from data centers, with projections indicating a near tripling of power use by 2028, potentially reaching 6.7% to 12% of total U.S. electricity consumption [3] Financial Performance - Utility companies generally experience consistent revenue growth and profitability, allowing them to enhance shareholder value through regular dividend payments [5] - NiSource has a market capitalization of $18.55 billion, while CenterPoint Energy has$23.16 billion [7] Growth Projections - The Zacks Consensus Estimate for NiSource's 2025 earnings is $1.91 per share on revenues of$6.06 billion, indicating a year-over-year bottom-line increase of 9.1% and a top-line improvement of 11.1% [8] - CenterPoint Energy's 2025 earnings are estimated at $1.75 per share on revenues of$8.87 billion, reflecting year-over-year growth of 8% and 2.7% for bottom-line and top-line, respectively [8] Stock Performance - In the past year, NiSource's shares have risen 46.6%, while CenterPoint Energy's shares have increased by 26.3% [9] Debt and Financial Ratios - NiSource has a debt-to-capital ratio of 56.68%, and CenterPoint Energy has 66.28%, both lower than the industry average of 63.37% [10] - The times interest earned (TIE) ratio for NiSource is 2.9, and for CenterPoint Energy, it is 2.4, indicating sufficient financial flexibility to meet near-term interest obligations [11] Dividend Yield - NiSource's dividend yield is currently 2.85%, while CenterPoint Energy's is 2.47%, both exceeding the Zacks S&P 500 Composite's average of 1.3% [12] Investment Conclusion - Both NiSource and CenterPoint Energy are well-positioned for investment, with NiSource being favored due to better growth projections, debt management, TIE ratio, dividend yield, and price performance [13]