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Here’s Why You Should Get Rid of CenterPoint Energy (CNP) Now

Zacks

CenterPoint Energy, Inc.’s CNP operations are subject to the impact of weather patterns. Toward this, the Hurricane Harvey that hit the city of Houston in August 2017 disrupted the company’s operations during the third quarter of 2017.

The company estimates that as a result of Hurricane Harvey, total costs to restore the electric delivery facilities damaged will range from $110 – $120 million, while that for restoring natural gas distribution facilities damaged will range from $25 – $30 million.

Surely this impacted the company’s third quarter results as is evident from the 4% decline observed in the operating income of its Electric Transmission & Distribution segment. Moreover, CenterPoint’s total expenses during the third quarter increased 13.3% year-over-year.

Coming to its earnings performance, the company’s third-quarter 2017 earnings missed the Zacks Consensus estimate by 4.9%. Quarterly earnings also declined 4.9% on a year-over-year basis.


Additionally, the company is subject to severe regulatory and judicial proceedings along with fluctuating commodity prices. Any adverse decisions in pending regulatory cases can affect CenterPoint Energy’s earnings substantially.

These may have led the company's shares to underperform its broader industry in last three months. Evidently the company gained 1.1% in the last three months, compared with the broader industry's growth of 2.3%.

Zacks Rank & Key Picks

CenterPoint Energy currently carries a Zacks Rank #4 (Sell). Investors can consider better-ranked stocks in the same industry such as PNM Resources, Inc. PNM, IDACORP, Inc. IDA and UNITIL Corporation UTL, all of which carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PNM Resourcesposted positive earnings surprise of 9.41% in third quarter of 2017. Additionally, its current year estimates have increased to $1.86 per share from $1.85 per share in the last 60 days.

IDACORP posted positive earnings surprise of 8.43% in third quarter of 2017. Additionally, its current year estimates have increased to $4.08 per share from $4.00 per share in the last 60 days.

UNITIL Corporation reported positive earnings surprise of 45.45% in the third quarter of 2017. Its current year estimates have increased to $2.03 per share from $1.98 per share in the last 60 days.

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