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CenterPoint (CNP) Q2 Earnings: What's Ahead for the Stock?
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CenterPoint Energy, Inc. (CNP - Free Report) will release second-quarter 2016 financial results before the market opens on Aug 5. Last quarter, the utility reported a positive earnings surprise of 16.13%. Let’s see how things are shaping up at CenterPoint Energy prior to this announcement.
Factors to Consider
CenterPoint Energy has been investing substantially to expand its operations to cope with increasing utility demand. The company is currently focused on upgrading its infrastructure and improving reliability. CenterPoint Energy has set a capital outlay of $6.2 billion for the 2016–2020 period, including an allocation of $1.4 billion for 2016.
During the second quarter, the company acquired the retail energy services business of Continuum Retail Energy Services, LLC. With this acquisition, the company will be able to expand its footprint to 26 states and increase its customer count.
The company expects 2016 earnings in the range of $1.12 to $1.20 per diluted share, reflecting growth of 4–6% driven by its existing businesses and investments. An investment of $363 million in Enable Midstream preferred security and expansion of the company's non-regulated Energy Services business are expected to accelerate bottom-line growth.
The company's service territories witnessed above-average temperatures during the second quarter. This should translate into increased electric sales in these regions, which in turn, will boost the top line.
For the second quarter, the Zacks Consensus Estimate for earnings reflects a 9.7% year-over-year increase, while sales are anticipated to be up 3.6% to $1.59 billion.
On the flip side, a significant portion of CenterPoint Energy’s revenues are derived from natural gas sales. Hence, its revenue stream and results of operation are subject to the impact of fluctuating weather patterns and changes in natural gas usage.
Our proven model does not conclusively show that CenterPoint Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Zacks ESP: CenterPoint Energy has an Earnings ESP 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 20 cents.
Zacks Rank: CenterPoint Energy’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.
We note that Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few other operators in the utility space worth considering as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Pattern Energy Group Inc. has an Earnings ESP of +100.00% and a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 8.
AES Corporation (AES - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3. The company will report second-quarter results on Aug 5.
Great Plains Energy Incorporated (GXP - Free Report) has an Earnings ESP of +14.63% and a Zacks Rank #2. The company is expected to release second-quarter results on Aug 4.
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CenterPoint (CNP) Q2 Earnings: What's Ahead for the Stock?
CenterPoint Energy, Inc. (CNP - Free Report) will release second-quarter 2016 financial results before the market opens on Aug 5. Last quarter, the utility reported a positive earnings surprise of 16.13%. Let’s see how things are shaping up at CenterPoint Energy prior to this announcement.
Factors to Consider
CenterPoint Energy has been investing substantially to expand its operations to cope with increasing utility demand. The company is currently focused on upgrading its infrastructure and improving reliability. CenterPoint Energy has set a capital outlay of $6.2 billion for the 2016–2020 period, including an allocation of $1.4 billion for 2016.
During the second quarter, the company acquired the retail energy services business of Continuum Retail Energy Services, LLC. With this acquisition, the company will be able to expand its footprint to 26 states and increase its customer count.
The company expects 2016 earnings in the range of $1.12 to $1.20 per diluted share, reflecting growth of 4–6% driven by its existing businesses and investments. An investment of $363 million in Enable Midstream preferred security and expansion of the company's non-regulated Energy Services business are expected to accelerate bottom-line growth.
The company's service territories witnessed above-average temperatures during the second quarter. This should translate into increased electric sales in these regions, which in turn, will boost the top line.
For the second quarter, the Zacks Consensus Estimate for earnings reflects a 9.7% year-over-year increase, while sales are anticipated to be up 3.6% to $1.59 billion.
On the flip side, a significant portion of CenterPoint Energy’s revenues are derived from natural gas sales. Hence, its revenue stream and results of operation are subject to the impact of fluctuating weather patterns and changes in natural gas usage.
CENTERPOINT EGY Price and EPS Surprise
CENTERPOINT EGY Price and EPS Surprise | CENTERPOINT EGY Quote
Earnings Whispers
Our proven model does not conclusively show that CenterPoint Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Zacks ESP: CenterPoint Energy has an Earnings ESP 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 20 cents.
Zacks Rank: CenterPoint Energy’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.
We note that Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few other operators in the utility space worth considering as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Pattern Energy Group Inc. has an Earnings ESP of +100.00% and a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 8.
AES Corporation (AES - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3. The company will report second-quarter results on Aug 5.
Great Plains Energy Incorporated (GXP - Free Report) has an Earnings ESP of +14.63% and a Zacks Rank #2. The company is expected to release second-quarter results on Aug 4.
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 >>