NiSource (NI) Q3 2026 earnings review
NiSource raises long-term profit plan on Microsoft data center deal
NiSource, a gas and electric utility serving 3.8 million customers across six states, rebounded from a weak spring and signed a data center power deal with Microsoft. Third-quarter profit per share, excluding one-offs, rose 42% from a year ago to $0.27. Chief executive Lloyd Yates narrowed the 2026 profit outlook to the top half of its range and set a 2027 target up about 10% by our math.
| Profit per share, excluding one-offs | $0.27 +42% from a year ago |
|---|---|
| 2026 profit per share outlook | Raised upper half of $2.02–$2.07 |
| 2027 profit per share outlook | $2.22–$2.30 +10% vs 2026 midpoint by our math |
| 2027–2033 annual profit growth target | 10%–11% raised from 9%–10% |
⚖️ Verdict: 🟢 Bullish
The story got better because the Microsoft contract proves the utility can turn its data center pipeline into signed deals and lifted its long-term annual profit growth target to 10%–11%. The third-quarter profit rebound also leaves a smaller 11% growth hurdle for the fourth quarter. One caution: the brief release gave no revenue table and no update on Indiana's review of utility profit rates.
The question now is whether data center profit growth will outpace potential regulatory cuts in Indiana. Either the contracted power build drives double-digit profit growth, or state regulators trim allowed returns on the core utility and offset the gain. The third-quarter 10-Q filing and year-end GenCo segment breakout will show both sides.
🐂 Bull Case
Microsoft Deal Lifts Long-Term Profit Growth Target
NiSource, a regulated gas and electric utility serving 3.8 million customers across six states, builds power plants for data centers through its GenCo unit. Chief executive Lloyd Yates said "opportunities such as Microsoft and our GenCo pipeline further strengthen the outlook". That deal solves the worry that new data center signings had stalled after two quiet quarters.
- Long-term profit per share growth target (2027–2033): raised to 10%–11% a year, up from 9%–10%
- Customer bill savings from GenCo deals: $1.75 billion, up $350 million from last quarter
- 2027 profit per share outlook, excluding one-offs: $2.22–$2.30, up about 10% from 2026 by our math
The agreement matters because it turns pipeline talks into signed work and lifts the long-term plan for a second time this year. It also helps NiSource argue to Indiana regulators that data centers lower power bills for household customers.
What to watch: the fourth-quarter full-year report, when the utility plans to report GenCo as a separate segment for the first time. That disclosure will show how much profit the new Microsoft, Amazon and Alphabet contracts contribute.
Third-Quarter Rebound Eases Back-Half Profit Pressure
Going into the quarter, NiSource needed second-half profit per share to grow 14% to 21% from a year ago to meet its 2026 target after storms and a labor lockout hurt the spring quarter. Third-quarter profit per share, excluding one-offs, rose 42% to $0.27 from $0.19 a year earlier. The utility narrowed its full-year target to the "upper half of $2.02-$2.07".
This rebound matters because it takes the pressure off the fourth quarter. By our math, the narrowed full-year plan leaves about $0.57 per share for the fourth quarter, or 11% growth over last year's $0.51. That is a much smaller hurdle than the business faced three months ago, so the risk of a full-year miss has faded.
What to watch: fourth-quarter profit per share against the $0.56 to $0.58 implied by the full-year plan. Finishing in that range would extend the company's streak of meeting or beating its annual profit target to six straight years.
🐻 Bear Case
Cost Savings Plan Still Adds One-Off Expenses
NiSource started a multi-year reorganization called Value Captured earlier this year to hold down customer utility bills and trim internal overhead, while Yates says signed data center deals will "deliver approximately $1.75 billion in customer savings". In the third quarter, the utility booked another $6.0 million of "non-recurring third-party consulting costs and incremental severance incurred in connection with the Value Captured initiative", bringing nine-month charges to $11.4 million.
The company strips these charges out of its headline profit per share, which makes ongoing operations look cleaner than reported profit. Because the press release omits the income statement and operating expense lines, readers cannot see whether day-to-day operating costs actually slowed down after rising 15% in the first half of the year.
What to watch: operating and maintenance expenses in the third-quarter 10-Q filing. A rise faster than revenue growth would show that underlying utility costs are still climbing despite the reorganization charges.
Forty-Billion-Dollar Spending Plan Needs Outside Cash
Yates said "the extension of our long-term plan reflects the significant opportunities ahead for NiSource and our confidence in our ability to deliver". To build that infrastructure, the utility rolled out a $40.0 billion capital spending plan for 2027 through 2033, split between $32.0 billion for its regulated gas and electric systems and $8.0 billion for data center projects.
By our math, that $5.7 billion yearly spending pace matches the prior five-year plan of $28.6 billion, but locks in heavy cash outflows for two extra years. Because capital spending exceeds operating cash flow, NiSource funds the gap with debt and new stock, which pushed diluted shares up 1.6% from a year ago to 481.1 million.
What to watch: the annual equity issuance target and cash flow to debt ratio in the full third-quarter presentation and filing. Any increase above the prior $400 million to $600 million yearly stock sales target would mean more dilution for existing shareholders.
Risks this quarter didn't answer
The third-quarter press release gave only a net profit reconciliation and headline targets, leaving five standing regulatory and operational concerns without an update until the 10-Q filing arrives.
- Indiana regulatory review: no update on state investigations into allowed profit returns and cost trackers, or the $741 million gas plan denial; the 10-Q regulatory note will update this.
- Data center construction and unit profit: no update on power plant site work or standalone GenCo earnings; the 10-Q and year-end segment report will show progress.
- Schahfer coal plant cost recovery: no update on recovering $102.2 million of deferred costs from federal emergency orders; the 10-Q regulatory assets note will show the balance.
- Pennsylvania and Maryland rate rules: no update on state affordability pressure; the 10-Q rate case table will show pending filings.
💲 Other KPIs
Diluted shares rose 1.6% from 473.7 million a year ago as the utility issues stock to help fund its construction budget. Share count growth has stayed near 1.6% to 1.9% over the past three quarters, reducing per-share profit growth relative to total net income.
Net income available to common shareholders climbed 36.8% from $94.7 million a year ago, reversing last quarter's 55.5% drop when labor lockout and storm costs hit results. Weather had an identical $4.0 million pre-tax negative effect in both third quarters.
Profit per share excluding one-offs for the first nine months rose 8.0% from $1.38 a year ago, speeding up from 2.5% growth at the half-year mark. That leaves the utility three-quarters of the way to its full-year target before the winter heating season.
🔮 Guidance
Raised. NiSource narrowed its 2026 profit per share plan to the top half of its prior range, which puts the middle of the new range at about $2.06, or 8.3% growth over 2025. By our math, that leaves about $0.57 per share for the fourth quarter, up 11.3% from $0.51 a year ago. The utility has met or beaten its initial annual profit range for five straight years.
New. The initial 2027 outlook calls for $2.26 per share at the middle of the range. By our math, that represents 9.8% growth over the narrowed 2026 plan midpoint of $2.0575, accelerating from 2026's 8.3% pace as the first data center power contracts begin ramping.
Raised. Management lifted its long-term compound annual profit per share growth rate by 1 percentage point while rolling the window forward to 2027–2033. It is the second 1-point raise this year, up from 8%–9% in late 2025 and 9%–10% in the first quarter, driven by the new Microsoft agreement.
Unchanged. The traditional regulated utility plan, which excludes data center operations, still calls for 6% to 8% yearly profit per share growth, now extended by three years through 2033. That steady pace rests on 8% to 10% yearly growth in regulated utility rate base.
Raised. The new seven-year budget totals $40.0 billion, split between $32.0 billion for the base utility and $8.0 billion for data center infrastructure. By our math, the $5.71 billion yearly average matches the $5.72 billion yearly average of the prior five-year plan, supporting 9% to 10% yearly consolidated investment base growth.
❓ Key Questions
How much capacity and spending does the Microsoft deal add?
The release says the Microsoft agreement lifts customer savings by $350 million to $1.75 billion, while the seven-year data center capital budget rose only $400 million to $8.0 billion. Investors need the megawatts signed and whether Microsoft uses existing pool power or new plants.
Where do third-quarter revenue and operating expenses stand?
The earnings release only includes a net income reconciliation table, omitting revenue, segment profit, and operating expenses. After operating and maintenance costs jumped 15% in the first half, the 10-Q income statement is needed to check whether cost growth has slowed.
What happened with the denied $741 million Indiana gas plan?
Last quarter, Indiana regulators told NIPSCO to re-justify project benefits on its $741 million gas tracker plan, with a final order expected in the third quarter. Management has not yet said how much capital was approved or shifted to standard rate cases.
How will NiSource fund the $40 billion seven-year capital plan?
Extending the capital plan through 2033 adds $11.4 billion of total spending over two extra years. Management has not yet updated its $400 million to $600 million annual stock issuance target or its 14% to 16% cash flow to debt goal for the longer window.