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Factors Likely to Shape CenterPoint Energy's (CNP) Q1 Earnings

Zacks Equity Research

CenterPoint Energy, Inc. CNP is set to report first-quarter 2019 results on May 9, before the opening bell.

In the last reported quarter, the company delivered an earnings surprise of 0.00%. However, it surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 3.47%.

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

Factors Under Consideration

CenterPoint Energy's major service territories experienced below-than-normal winter in the first quarter. This, in turn, is likely to boost demand for electricity, leading to increased household expenditure for heating.

Moreover, in February, the company completed its Vectren Corporation merger. Post the transaction, CenterPoint Energy’s assets and enterprise value totaled approximately $29 billion and $27 billion, respectively. The merger is likely to boost the company’s revenues in the quarter to be reported.

For first-quarter revenues, the Zacks Consensus Estimate stands at $3.85 billion, suggesting a 22% improvement from the year-ago quarter’s reported figure.

CenterPoint Energy, Inc. Price and EPS Surprise

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

On the flip side, acquisition costs related to the Vectren merger are expected to weigh on CenterPoint Energy’s first-quarter earnings. Higher interest expenses are also worrisome.

The Zacks Consensus Estimate for quarterly earnings, pegged at 50 cents, indicates a 9.1% decline from the prior-year quarter’s reported number.

Earnings Whispers

Our proven model does not show an earnings beat for CenterPoint Energy in first-quarter 2019. That 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. That is not the case here as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: CenterPoint Energy has an Earnings ESP of -0.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3, which along with a negative Earnings ESP, makes surprise prediction difficult.

Note that 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

Investors can consider the following players from the same sector that have the right combination of elements to post an earnings beat in the upcoming releases.

South Jersey Industries, Inc. SJI has an Earnings ESP of +1.83% and a Zacks Rank #3. The company is slated to report first-quarter 2019 results on May 8.

Pattern Energy Group Inc. PEGI has an Earnings ESP of +18.64% and a Zacks Rank #3. The company is slated to report first-quarter 2019 results on May 10.

A Recent Utility Release

Dominion Energy Inc. D reported first-quarter 2019 operating earnings of $1.10 per share, which missed the Zacks Consensus Estimate of $1.12 by 1.8%. Total revenues came in at $3,858 million, lagging the Zacks Consensus Estimate of $4,614 million by 16.4% but improved 11.3% from $3,466 million registered in the year-ago quarter.

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