CenterPoint Energy (CNP) Up 4.1% Since Earnings Report: Can It Continue?

About a month has gone by since the last earnings report for CenterPoint Energy, Inc. CNP. Shares have added about 4.1% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 Tops Q2 Earnings, Keeps '17 View

CenterPoint Energy reported second-quarter 2017 adjusted earnings of $0.29 per share, beating the Zacks Consensus Estimate of $0.21 by 38.1%. Quarterly earnings improved 70.6% from the year-ago figure of $0.17.

While GAAP earnings in the reported quarter were $0.31 compared with the company’s GAAP loss of $0.01 in the year-ago quarter.

Revenues

CenterPoint Energy’s total revenue in the reported quarter was $2,143 million, which surpassed the Zacks Consensus Estimate of $1,790.4 million by 19.7%. Revenues were also 36.1% higher than $1,574 million reported a year ago.

The rise in the top line was driven by higher contribution from Natural Gas Distribution and Energy Services segments, offset marginally by lower contribution from Electric Transmission & Distribution segment.

Operational Results

Total expenses during the quarter increased 37.9% to $1,920 million.

The company’s operating income improved 22.5% to $223 million from $182 million in the year-ago quarter.

Interest and other finance charges decreased to $77 million in the reported quarter from $86 million a year ago.

Segment Results

The Electric Transmission & Distribution segment reported operating income of $164 million during the second quarter compared with $158 million in the year-ago quarter.

The Natural Gas Distribution segment reported operating income of $37 million compared with $20 million in the year-ago quarter.

The Energy Services segment reported operating income of $16 million in the second quarter.

Financial Condition

As of Jun 30, CenterPoint Energy had cash and cash equivalents of $248 million, down from $341 million as of Dec 31, 2016.

Total long-term debt was $7,587 million as of Jun 30 compared with $7,532 million as of Dec 31, 2016.

At the end of the second quarter, the company’s net cash from operating activities was $680 million, down from $1,061 million in the year-ago period.

Also, CenterPoint Energy’s total capital expenditure was $370 million in the second quarter, up from $358 million in the year-ago quarter.

Guidance

CenterPoint Energy reaffirmed its 2017 earnings guidance in the range of $1.25–$1.33 per diluted share. This earlier included estimated utility operations earnings of $0.93–$0.97 per diluted share and midstream investment earnings of $0.31–$0.37 per diluted share.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 5.2% due to these changes.

CenterPoint Energy, Inc. Price and Consensus

 

CenterPoint Energy, Inc. Price and Consensus | CenterPoint Energy, Inc. Quote

VGM Scores

At this time, CenterPoint Energy's stock has a subpar Growth Score of D, while it is doing a bit better on the momentum front with C. 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.

The company's stock is more suitable for value than momentum based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift.  Notably, the stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.

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