Per a media release, CenterPoint Energy’s (CNP - Free Report) subsidiary — Vectren Energy — recently secured a $16.2-million natural gas distribution contract from Wright-Patterson Air Force Base. The contract was awarded by the Air Force Life Cycle Management Center, Ohio and the work is expected to be completed by Sep 30, 2029.
Rationale of the Deal
In February 2019, CenterPoint Energy acquired Vectren Corporation. The subsidiary provides natural gas and electricity to more than 1 million customers that include nearly two-thirds of Indiana and about 20% of Ohio. In 2017, Vectren was awarded 50-year contract by the same base to maintain the natural gas infrastructure. The recent contract reflects Wright-Patterson Air Force Base’s optimism regarding the energy company.
Currently, CenterPoint Energy is investing in the upgrade of its infrastructure and improvement of service quality. The company plans to invest $12.1 billion from 2019 through 2023. These funds will be utilized primarily to maintain reliability and safety, increase resiliency as well as meet increasing utility demand. The recent contract win ensures stable earnings for the company on a long-term basis.
Focus to Increase Customer Base
In the last several years, the company’s performance was driven by steady growth in customer base. In the second quarter of 2019, the company added 42,624 new meter customers under its Electric Transmission & Distribution segment. It also added 1,082,302 users in the Gas Utility business during the second quarter. Ongoing economic development in its operating territories primarily led to the uptick in customer count.
The Vectren merger added more customers and generated earnings of 8 cents per share in second-quarter 2019.
Zacks Rank & Price Movement
CenterPoint Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 12 months, the company’s shares have gained 8.9% compared with the industry’s growth of 17.1%.
Stocks to Consider
Some better-ranked stocks in the utility sector are IDACORP Inc (IDA - Free Report) , NRG Energy, Inc (NRG - Free Report) and The AES Corporation (AES - Free Report) . NRG Energy sports a Zacks #1 (Strong Buy), while IDACORP and AES hold a Zacks #2 (Buy).
IDACORP, NRG Energy and AES delivered average positive earnings surprise of 7.79%, 11.64% and 4.85%, respectively, in the last four quarters.
Long-term earnings growth for IDACORP, NRG Energy and AES is pegged at 3.85%, 36.26% and 8.49%, respectively.
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