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CenterPoint (CNP) Hits 52-Week High on Robust 2017 View


Shares of CenterPoint Energy Inc. CNP scaled a new 52-week high of $25.47 on Jan 12, before closing a little lower at $25.33. With a market cap of around $11.11 billion, the average volume of shares traded over the last three months is approximately 3.42 million.

Price Movement

Shares of CenterPoint Energy have gained 43.7% in the last 12 months, outperforming the Zacks categorized Utility – Electric Power industry’s gain of 6.1%. The company has also outperformed the 19.6% gain of the S&P 500 group over the same period.

Ongoing improvement in the economic conditions of CenterPoint Energy’s territories is helping the company expand its customer base, which in turn is translating into higher demand for its services.

What’s Driving CenterPoint Energy?

CenterPoint Energy’s shares have been on the rise ever since the company issued its bottom-line guidance for 2017. The company announced that it expects earnings in the range of $1.25 to $1.33 per share in 2017. The company also reaffirmed its 2016 earnings expectations in the range of $1.16 to $1.20 per share.

In 2017, CenterPoint Energy’s earnings are expected to benefit from higher contribution from the utilities and improved performance at Energy Services as a result of the company’s acquisitions. The bottom line is anticipated to be supported by its investments in Utility operations and the Midstream business. CenterPoint Energy plans to invest $1.5 billion in 2017, 14% higher than its previous capital expenditure forecast for the year.

We note that CenterPoint Energy is investing substantially to expand its operations to cope with the increasing utility demand. The company is currently focused on upgrading infrastructure and improving reliability. It has set a capital outlay of $6.2 billion from 2016 through 2020. The company is targeting annual EPS growth of 4–6% through 2018, including Midstream Investments. These initiatives will collectively enable CenterPoint Energy to provide reliable services, besides meeting increasing customer demand.

Again, the company recently announced that it remains focused on maximizing shareholder wealth through the payment of steady and incremental dividends. The company’s board of directors declared a 4% increase in its quarterly cash dividend rate. CenterPoint Energy will reward shareholders with a dividend of 26.75 cents per share, up from 25.75 cents paid earlier. On an annualized basis, its dividend rate will come to $1.07 per share.

On Jan 3, CenterPoint Energy announced that its wholly owned subsidiary, CenterPoint Energy Services, Inc., has completed the acquisition of Atmos Energy Holdings, Inc.’s retail energy services business, Atmos Energy Marketing, LLC. The acquisition will allow CenterPoint Energy Services to gain access to new markets and customer segments more efficiently. Atmos Energy Marketing’s operational and geographic footprint will enable CenterPoint Energy Services to unlock growth opportunities, and maintain focus on improving customer service and creating a cost-effective organizational structure.

Zacks Rank & Other Key Picks

CenterPoint Energy currently has a Zacks Rank #2 (Buy). Other favorably placed stocks in the same space include Ameren Corp. AEE, Hawaiian Electric Industries, Inc. HE and Exelon Corp. EXC. All the companies carry the same Zacks Rank as CenterPoint Energy. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren’s 2017 estimates improved 0.4% to $2.77 from $2.76 over the last 60 days. Shares of the company gained 20.5% in the last 12 months, outperforming the broader industry.

Hawaiian Electric’s 2017 estimates inched up 0.6% to $1.80 from $1.79 over the last 60 days. Its shares gained 20.7% in the last 12 months, outperforming the broader industry.

Exelon Corporation’s 2017 estimates inched up 1.1% to $2.68 from $2.65 over the last 60 days. Its shares gained 28.7% in the last 12 months, outperforming the broader industry.

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