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Why Is CenterPoint (CNP) Up 0.8% Since Last Earnings Report?

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Zacks Equity Research
·4 min read
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A month has gone by since the last earnings report for CenterPoint Energy (CNP). Shares have added about 0.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.

CenterPoint Energy Q3 Earnings Beat, Revenues Fall Y/Y

CenterPoint Energy, Inc. reported third-quarter 2020 adjusted earnings of 34 cents per share, which surpassed the Zacks Consensus Estimate of 32 cents by 6.25%. The bottom line however deteriorated 27.7% from the year-ago quarter earnings of 47 cents.

The company reported GAAP earnings of 13 cents per share compared with earnings of 47 cents registered in the prior-year quarter.

Revenues

CenterPoint Energy’s total revenues in the quarter were $1,622 million, which lagged the Zacks Consensus Estimate of $1,624 million by a mere 0.1%. Moreover, the reported figure came in 2.2% lower than the prior-year quarter’s $1,658 million.

Decreased contribution from the utility and non-utility segment dragged down the top line.

Operational Results

Total expenses during the third-quarter increased 1.5% to $1,320 million.

The company’s operating income declined 15.4% year over year to $302 million in the third-quarter.

Interest expense and other finance charges decreased to $121 million from $134 million in the year-ago quarter.

Segment Results

The Houston Electric-Transmission & Distribution segment reported net income of $157 million for the third-quarter compared with $185 million in the year-ago quarter.

The Natural Gas Distribution segment registered net income of $5 million compared with the year-ago quarter’s $6 million.

The Indiana Electric - Integrated segment generated net income of $31 million compared with $34 million in the year-earlier period.

The Midstream Investments segment recorded net loss of $62 million against the net income of $50 million in the prior-year quarter.

Financial Condition

As of Sep 30, 2020, CenterPoint Energy had cash and cash equivalents of $185 million, down from $241 million as of Dec 31, 2019.

Total long-term debt was $11,946 as of Sep 30, 2020, compared with $14,244 million as of Dec 31, 2019.

At the end of third-quarter 2020, the company’s net cash from operating activities was $1,439 million, up from the previous year’s $1,086 million.

Further, CenterPoint Energy’s total capital expenditure was $642 million in the third-quarter, down from $666 million in the year-ago quarter.

2020 Guidance

CenterPoint Energy has raised its 2020 Utility EPS guidance range to $1.12 - $1.20 per share, from the earlier guidance of $1.10 - $1.20.

The Zacks Consensus Estimate for current-year earnings is pegged at $1.29, which lies above the guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.57% due to these changes.

VGM Scores

At this time, CenterPoint has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, CenterPoint has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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