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CenterPoint Energy (CNP) Q1 Earnings: What's in the Cards?

Zacks Equity Research

CenterPoint Energy, Inc. CNP will release first-quarter 2017 financial results before the market opens on May 5.

Last quarter, the company posted a negative earnings surprise of 10.34%. However, the company surpassed the Zacks Consensus Estimate in two of the past four quarters, with an average positive earnings surprise of 0.40%.

Let’s see how things are shaping up at the company prior to this announcement.

Factors at Play

During the fourth-quarter earnings call, CenterPoint Energy announced its plan to make higher capital investment in 2017 than in previous years. We may expect the company’s first quarter results to reflect a portion of this hiked investment strategy.

Moreover, in the to-be-reported quarter, the company started construction in its $310 million-worth Brazos Valley Connection project. Further updates of progress on this project can be expected once the company releases its first-quarter results.

Additionally, CenterPoint Energy raised its quarterly cash dividend rate by 4% at the very onset of the first quarter, bringing the quarterly dividend to 26.75 cents. On an annualized basis, the dividend rate will come to $1.07 per share. This shows the stable financial position that CenterPoint boasts.

However, the company's service territories witnessed warmer-than-normal temperatures during the first quarter. This will result in lower household expenditure on heating, which might unfavorably impact revenues in the first quarter.

For the first quarter, the Zacks Consensus Estimate for earnings projects a decline of 0.9%, while the consensus for revenues hints at an improvement of almost 17% on a year-over-year basis.

CenterPoint Energy, Inc. Price and EPS Surprise


CenterPoint Energy, Inc. Price and EPS Surprise | CenterPoint Energy, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that CenterPoint Energy will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: CenterPoint Energy has an Earnings ESP of -2.78%. This is because the Most Accurate estimate stands at 35 cents, lower than the Zacks Consensus Estimate of 36 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CenterPoint Energy carries a Zacks Rank #2, which increases the predictive power of ESP. However, the Earnings ESP of -2.78% makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are a few stocks in the Utility space worth considering on the basis of our model which shows that they have the right combination to pull off a beat:

Dominion Resources, Inc. D will report first-quarter results on May 4. The company has an Earnings ESP of +2.15% and a Zacks Rank #3.

Pattern Energy Group, Inc. PEGI has an Earnings ESP of +250.00% and a Zacks Rank #3. The company is expected to report first-quarter results on May 9. You can see the complete list of today’s Zacks #1 Rank stocks here.

The AES Corporation AES has an Earnings ESP of +15.79% and a Zacks Rank #3. The company is slated to release first-quarter results on May 8.

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CenterPoint Energy, Inc. (CNP): Free Stock Analysis Report
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Pattern Energy Group Inc. (PEGI): Free Stock Analysis Report
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