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Why Is CenterPoint (CNP) Up 1.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for CenterPoint Energy (CNP - Free Report) . Shares have added about 1.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CenterPoint due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CenterPoint Energy Q3 Earnings Lag, Revenues Rise Y/Y

CenterPoint Energy reported third-quarter 2018 adjusted earnings of 39 cents per share, lagging the Zacks Consensus Estimate of 41 cents by 4.9%. Quarterly earnings improved by a penny from the year-ago quarter’s tally.

The company reported GAAP earnings of 35 cents per share in the reported quarter.

Revenues

CenterPoint Energy’s total revenues in the quarter were $2,212 million, which surpassed the Zacks Consensus Estimate of $2,120 million by 4.3%. Revenues were also 5.4% higher than $2,098 million reported a year ago.

The rise in the top line was driven by higher contribution from both its utility and non-utility segments.

Operational Results

Total expenses during the third quarter increased 10.3% to $1,986 million.

The company’s operating income declined 23.1% to $226 million from $297 million in the year-ago quarter.

Interest and other finance charges increased to $90 million from $80 million a year ago.

Segment Results

The Electric Transmission & Distribution segment reported operating income of $227 million during the third quarter compared with $254 million in the year-ago quarter.

The Natural Gas Distribution segment reported operating income of $3 million compared with $25 million in the year-ago quarter.

The Energy Services segment reported operating loss of $9 million against the operating income of $7 million in the year-ago quarter.

The company’s midstream investments segment reported $81 million of equity income compared with $68 million a year ago.

The company’s other operations segment reported operating income of $5 million compared with operating income of $11 million in the prior-year quarter. This decrease is primarily due to costs related to the pending merger with Vectren.

Financial Condition

As of Sep 30, 2018, CenterPoint Energy had cash and cash equivalents of $293 million, up from $260 million as of Dec 31, 2017.

Total long-term debt was $7,252 million as of Sep 30, 2018 compared with $8,195 million as of Dec 31, 2017.

At the end of third-quarter 2018, the company’s net cash from operating activities was $1,679 million, up from $1,028 million in the year-ago period.

Also, CenterPoint Energy’s total capital expenditure was $434 million, up from $358 million a year ago.

2018 Guidance

CenterPoint Energy reaffirmed its 2018 earnings guidance. The company expects to achieve the high end of the earlier announced guidance range of $1.50-$1.60 per diluted share, excluding costs associated with the pending merger with Vectren.

In addition, the company has issued $5.2 billion of debt and equity securities to fund the pending merger with Vectren. Therefore, 2018 is expected to have higher net interest expenses and a higher common stock share count.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted -6.97% due to these changes.

VGM Scores

At this time, CenterPoint has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

CenterPoint has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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