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CenterPoint (CNP) Up 2.5% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for CenterPoint Energy (CNP). Shares have added about 2.5% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

CenterPoint Energy Q1 Earnings Beat, Revenues Fall Y/Y

CenterPoint Energy reported first-quarter 2020 adjusted earnings of 50 cents per share, which surpassed the Zacks Consensus Estimate of 45 cents by 11.1%. The bottom line also improved 8.7% from the year-ago quarter’s 46 cents.

The company incurred GAAP loss of $2.44 per share against earnings of28 cents registered in the prior-year quarter.

The year-over-year downside can be attributed to after-tax non-cash impairment charges and losses on assets held for sale in the first quarter of 2020.

Revenues

CenterPoint Energy’s total revenues in the quarter were $2,167 million, which lagged the Zacks Consensus Estimate of $2,332 million by 7.1%. Moreover, the reported figure came in 2.8% lower than the prior-year quarter’s $2,229 million.

Decreased contribution from utility segment dragged down the top line.

Operational Results

Total expenses during the first quarter declined 3.4% to $1,950 million.

The company’s operating income rose 2.8% year over year to $217 million in the first quarter.

Interest and other finance charges increased to $139 million from $121 million in the year-ago quarter.

Segment Results

The Houston Electric-Transmission & Distribution segment reported adjusted earnings of $40 million for the first quarter compared with $38 million witnessed in the year-ago quarter.

The Natural Gas Distribution segment registered adjusted earnings of $207 million compared with the year-ago quarter’s $164 million.

The Indiana Electric –Integrated segment generatedadjusted earnings of $14 million compared with $9 million in the year-earlier period.

The Midstream Investments segment recorded adjusted earnings of $50 million compared with $24 million in the prior-year quarter.

The Corporate and Other Operations segment reported earnings of $4 million against loss of $22 million in the year-ago quarter.

Financial Condition

As of Mar 31, 2020, CenterPoint Energy had cash and cash equivalents of $220 million, down from $241 million as of Dec 31, 2019.

Total long-term debt was $13,830 million as of Mar 31, 2020, compared with $14,244 million as of Dec 31, 2019.

At the end of first-quarter 2020, the company’s net cash from operating activities was $662 million, up from the previous year’s $271 million.

Further, CenterPoint Energy’s total capital expenditure was$615 million in the first quarter, up from $528 million in the year-ago quarter.

2020 Guidance

CenterPoint Energy reiterated its 2020 earnings guidance. The company still expects to generate earnings of $1.10-$1.20 per share.

The Zacks Consensus Estimate for current-year earnings is pegged at $1.32, which lies above the guided range.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -22.97% due to these changes.

VGM Scores

At this time, CenterPoint has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CenterPoint has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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