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Why Is CenterPoint (CNP) Up 1.9% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for CenterPoint Energy (CNP). Shares have added about 1.9% 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 Q4 Earnings In Line, Revenues Beat

CenterPoint Energy reported fourth-quarter 2018 adjusted earnings of 36 cents per share, which came in line with the Zacks Consensus Estimate. The bottom line improved by 9.1% from the year-ago quarter’s tally of 33 cents.

The company’s GAAP earnings came in at 18 cents per share compared with $2.99 registered in the prior-year quarter.

For 2018, CenterPoint Energy posted adjusted earnings of $1.60 per share, which surpassed with the Zacks Consensus Estimate of $1.59 by a penny. Full-year earnings also improved by 16.8% from the year-ago tally of $1.37.

Revenues

CenterPoint Energy’s total revenues in the quarter were $3.04 billion, which outpaced the Zacks Consensus Estimate of $2.66 billion by 14.3%. The reported figure was also 15.1% higher than $2.64 billion a year ago.

Increased contribution from both the utility and non-utility segments led to top-line growth.

For 2018, the company’s total revenues of $10.59 billion outshined the Zacks Consensus Estimate of $9.69 billion by 9.3%. The top line was also 10.1% higher than $9.62 billion registered in 2017.

Operational Results

Total expenses during the fourth quarter increased 23.1% to $2,869 million.

The company’s operating income declined 45.8% to $167 million from $308 million in the year-ago quarter.

Interest and other finance charges increased to $102 million from $78 million a year ago.

Segment Results

The Electric Transmission & Distribution segment reported operating income of $100 million in the fourth quarter compared with $125 million in the year-ago quarter.

The Natural Gas Distribution segment reported operating income of $100 million compared with $113 million in the year-ago quarter.

The Energy Services segment incurred operating loss of $27 million against operating income of $68 million in the year-ago quarter.

The midstream investments segment reported $99 million of equity income compared with $66 million a year ago.

The Other Operations segment incurred operating loss of $6 million against operating income of $2 million in the prior-year quarter. The downturn can be primarily attributed to costs related to the merger with Vectren.

Financial Condition

As of Dec 31, 2018, CenterPoint Energy had cash and cash equivalents of $4,231 million, up significantly from $260 million as of Dec 31, 2017.

Total long-term debt was $8,682 million as of Dec 31, 2018, compared with $8,195 million as of Dec 31, 2017.

At the end of 2018, the company’s net cash from operating activities was $2,136 million, up from $1,417 million in the previous year.

Further, CenterPoint Energy’s total capital expenditure totaled $1,720 million in 2018, up from $1,494 million a year ago.

2019 Guidance

CenterPoint Energy issued its 2019 earnings guidance. The company currently expects to generate earnings in the range of $1.60-$1.70 per diluted share, excluding certain impacts associated in relation to its merger with Vectren.

The Zacks Consensus Estimate for 2019 earnings is pegged at $1.67, which lies above the mid-point of the company’s guided range.

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How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -5.28% 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. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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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