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CenterPoint (CNP) Expanded Natural Gas Services in Illinois

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CenterPoint Energy, Inc. (CNP - Free Report) recently announced that its Energy Services segment, which operates through CenterPoint Energy Services, Inc. and its subsidiary CenterPoint Energy Intrastate Pipelines, LLC, has expanded its retail natural gas supply to residential customers and businesses of all sizes in Illinois.

From this month, the company began providing services in Illinois, where it already established presence. Currently, it serves more than 6,000 commercial and industrial customers in this state.

Prospects of CenterPoint Energy

Presently, CenterPoint Energy is focusing on expanding its customer base. Notably, between the second quarter of the last year and second-quarter 2018, the company added 34,097 meter customers under its Electric Transmission & Distribution segment. Further, CenterPoint added 29,500 users at the Gas Utility business during the same time frame.

CenterPoint Energy is investing substantially to expand its operations to meet increasing utility demand. The company of has plans to investment $8.2 billion, between 2018 and 2022, includes an investment of $1.7 billion in 2018. This reflects 17% rise in the company’s investment plan from the last year’s projection.

Further, in April 2018, the company announced that it signed a merger agreement with Vectren Corporation (VVC). Per management, the new enterprise will realize additional earnings by investing regulated capital of more than $2 billion each year through 2022 to meet the need of the customer base of over 7 million. No doubt the merger will improve CenterPoint Energy’s competitive position in the Utility sector.

Market Outlook

Fundamentals of natural gas continue to be favorable for the long run, considering the shift to cleaner burning fuel for power generation globally, and in the Asia-Pacific region in particular.

The U.S. Energy Information Administration (EIA) forecasts that U.S. natural gas production, consumption, and exports is expected to grow through 2019. The EIA anticipates natural gas production to increase nearly 11% in 2018. It also anticipates the average to be 81.3 billion cubic feet per day (Bcf/d) for the year. Moreover, the EIA expects natural gas production to witness growth in 2019, with average production reaching 84.5 Bcf/d.

Growing production of natural gas in the United States, increasing replacement of coal-fired power plants and higher energy consumption by industrial projects are likely to ensure strong natural gas demand.

Price Performance

CenterPoint Energy stock has rallied nearly 1% over the past six months, outperforming the industry’s return of 0.0%.


Zacks Rank & Other Key Picks

CenterPoint Energy currently has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the same space are Ameren Corporation (AEE - Free Report) , Dominion Energy Inc. (D - Free Report) and Xcel Energy Inc. (XEL - Free Report) . All the three companies have a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren delivered an average positive earnings surprise of 9.76% in the last four quarters. The Zacks Consensus Estimate for current-year earnings has been revised 1.3% upward to $3.25 per share over the past 30 days.

Dominion Energy pulled off an average earnings surprise of 6.33% over the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has been raised 0.2% to $4.13 per share over the past 30 days.

Xcel Energy came up with an average beat of 6.38% in the preceding four quarters. The Zacks Consensus Estimate for the current-year bottom line has moved 0.4% north to $2.47 per share over the past 30 days.

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