U.S. Markets close in 4 hrs 29 mins

CenterPoint and Vectren Merger Receive Final IURC Approval

Zacks Equity Research

CenterPoint Energy, Inc. CNP recently announced the receipt of the final nod for its pending merger with Vectren Corp. VVC from the Indiana Utility Regulatory Commission (IURC). Now, the transaction awaits the  remaining order with the Public Utilities Commission of Ohio (PUCO), post which its completion can be expected in the first quarter of 2019.

Prior to receiving the final IURC approval, the pending merger had  received necessary approvals from Vectren shareholders, Federal Energy Regulatory Commission (FERC) and the Federal Communications
Commission (FCC).

Benefits of the Merger

The acquisition of Vectren, a deal worth roughly $6 billion, will help create a new company that would serve more than 7 million utility customers across nearly 40 states in the United States. On completion of the deal, the combined company can be expected to avail low-risk opportunities in natural gas distribution and electricity generation & transmission segments.

Moreover, the combined company is projected to have electric and natural gas delivery operations in eight states with assets totaling $29 billion with an enterprise value of $27 billion. The merger deal is expected to generate pre-tax earnings of $50-$100 million for the combined company by 2020. Management at CenterPoint Energy believes that the merger will help reduce the equity financing needed for the company’s capital budget.

The new entity is also expected to gain opportunities to leverage and expand competitive energy-related services across a larger U.S. footprint and create long-term efficiencies in the delivery of services. This, in turn, will help the company gain better access to capital, driving its revenue components and customer base.

Price Movement

CenterPoint Energy stock has rallied nearly 10.6% over the past 12 months, outperforming the industry’s growth of 7.1%. The outperformance must have been led by significant customer growth and investments to upgrade infrastructure.

Zacks Rank & Other Stocks to Consider

CenterPoint Energy currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the same space are Ameren Corp. AEE and Idacorp Inc. IDA, both sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren Corp has estimated long-term earnings growth rate of 6.8%. It surpassed the Zacks Consensus Estimate for earnings in the trailing four quarters by an average of 15.40%.

Idacorp has estimated long-term earnings growth rate of 2.60%. It exceeded the Zacks Consensus Estimate for earnings in the trailing four quarters by an average of 11.69%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ameren Corporation (AEE) : Free Stock Analysis Report
IDACORP, Inc. (IDA) : Free Stock Analysis Report
Vectren Corporation (VVC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research