Back to top

Image: Bigstock

CenterPoint Hits 52-Week High on Strong Investment Plans

Read MoreHide Full Article

Shares of CenterPoint Energy Inc. (CNP - Free Report) scaled a new 52-week high of $22.51 on May 30. With a market cap of around $9.69 billion, the company has seen its shares soar roughly 25.82% so far this year, outperforming the 2.70% gain of the S&P 500 group over the same period.

What’s Driving CenterPoint Energy?

CenterPoint Energy’s shares have been on the rise ever since the company reported first-quarter 2016 results on May 10. First-quarter earnings of 36 cents per share surpassed the Zacks Consensus Estimate by 16.1% and increased 20% from the year-ago adjusted number.

CenterPoint Energy has delivered positive earnings surprises in three out of the last four quarters. Thanks to its consistent performance, the company expects 2016 earnings in the range of $1.12–$1.20 per diluted share. This includes expectations of earnings per diluted share from utility operations of 88–92 cents and midstream investment of 24–28 cents.

A steady growth in customer count has mainly driven CenterPoint Energy’s performance over the last several quarters. In the first quarter, the company added 54,078 meter customers under its Electric Transmission & Distribution segment. This represents an annual growth rate of 2%. Also, CenterPoint added 18,727 users at its Gas Utility business during this period. Ongoing economic development in CenterPoint Energy’s operating territories primarily boosted the customer count.

CenterPoint Energy is investing substantially to expand its operations to cope with the increasing utility demand. The company is currently focused on upgrading infrastructure and improving reliability. It has set a capital outlay of $6.2 billion from 2016 through 2020, including an investment of $1.4 billion for 2016. The company is targeting annual EPS growth of 4–6% through 2018, including Midstream Investments. These initiatives will collectively enable CenterPoint Energy to provide reliable services, besides meeting increasing customer demand.

On Apr 1, CenterPoint Energy Services, Inc. (“CES”), a unit of CenterPoint Energy, closed a previously announced agreement to acquire the retail energy services business of Continuum Retail Energy Services, LLC. The transaction also includes the takeover of Continuum Energy Services, LLC’s wholly-owned subsidiary, Lakeshore Energy Services, LLC, as well as its natural gas wholesale assets. With this acquisition, CES will be able to expand its footprint to 26 states and serve almost 24,000 commercial and industrial customers, and over 65,000 residential natural gas customers across the states of California, Michigan, Nebraska, Ohio and Wyoming.

CenterPoint Energy currently has a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other favorably placed stocks in the same industry include Spark Energy, Inc. , Avista Corp. (AVA - Free Report) and Korean Electric Power Corp. (KEP - Free Report) . While Spark Energy sports a Zacks Rank #1 (Strong Buy), both Avista Corp. and Korean Electric Power has a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Korea Electric Power Corporation (KEP) - free report >>

CenterPoint Energy, Inc. (CNP) - free report >>

Avista Corporation (AVA) - free report >>

Published in