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Reasons to Add CenterPoint (CNP) to Your Portfolio Right Now

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CenterPoint Energy, Inc. (CNP - Free Report) is investing significantly to expand its operations and meet the increasing demand. The company is currently focused on upgrading its infrastructure and improving reliability. Given its growth opportunities, CNP makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment option at the moment.

Growth Projections, Earnings Growth & Surprise History

The Zacks Consensus Estimate for CNP’s 2023 earnings per share (EPS) has increased 0.7% to $1.5 in the past seven days. This indicates a year-over-year bottom-line increase of 8.7%.

CenterPoint’s long-term (three- to five-year) earnings growth is pegged at 7.41%. It delivered an average earnings surprise of 2.1% in the last four quarters.

Return on Equity

Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, CenterPoint’s ROE is 9.88%, higher than the industry’s average of 4.6%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.

Debt Position

In the past 12 months, CNP’s total debt to capital was 17.84%, much better than industry’s average of 60.61%.
The time to interest earned ratio at the end of fourth-quarter 2022 was 3.7. The ratio, being greater than one, reflects CenterPoint’s ability to meet future debt obligations without difficulties.

Dividend History

The utility company has been consistently paying dividends to its shareholders. Recently, the CNP’s board of directors approved a dividend hike of 5.6%. This resulted in a quarterly dividend of 19 cents per share, up from the previous quarter’s 18 cents. This increase represents an annualized dividend of 76 cents per share. CenterPoint’s current dividend yield is 2.51%, better than the Zacks S&P 500 Composite’s yield of 1.53%.

Systematic Investments

In November 2022, CNP increased its 10-year capital investment plan from $40 billion to $43 billion. Out of this, the company expects to spend $3.6 billion in 2023. These funds will be utilized to maintain customer reliability and safety, increase resiliency and expand CNP’s systems through value-added projects.

CenterPoint’s capital plan is expected to witness a CAGR of approximately 11% through 2025 owing to such investment plans. The company’s planned capital expenditure on growth projects will enable it to deliver an 8% annual growth rate through the 2023-2024 period.

Price Performance

In the past six months, CNP’s shares have gained 13.6% compared with the industry’s average growth of 12.5%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

A few other top-ranked stocks from the same industry are Exelon Corporation (EXC - Free Report) , NextEra Energy, Inc. (NEE - Free Report) and NiSource Inc. (NI - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Exelon’s long-term earnings growth is pegged at 6.63%. The Zacks Consensus Estimate for the company’s 2023 EPS is pinned at $2.35, implying a year-over-year increase of 3.52%.

NextEra Energy’s long-term earnings growth is pegged at 9.04%. The Zacks Consensus Estimate for the company’s 2023 EPS is pinned at $3.12, implying a year-over-year increase of 7.6%.

NiSource’s long-term earnings growth is pegged at 6.8%. The Zacks Consensus Estimate for the company’s 2023 EPS is pinned at $1.57, implying a year-over-year increase of 6.8%.

 

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