CenterPoint Energy (CNP) should be plodding along like any other big-state utility, offering income and stability to an investor’s portfolio. However, a court ruling worth billions led to a mini-stampede into the shares. Analysts now expect the stock to slow down following the influx of investor cash.
CenterPoint Energy is a public utility holding company whose indirect wholly owned subsidiaries include CenterPoint Energy Houston Electric, which engages in the electric transmission and distribution business in a 5,000-square mile area of the Texas Gulf Coast that includes the city of Houston, and CenterPoint Energy Resources Corp., which owns and operates natural gas distribution systems in six states.
Subsidiaries of CERC Corp. own interstate natural gas pipelines and gas gathering systems and provide various ancillary services. A wholly owned subsidiary of CERC Corp. offers variable and fixed-price physical natural gas supplies primarily to commercial and industrial customers and electric and gas utilities.
CNP’s reportable business segments are Electric Transmission & Distribution, Natural Gas Distribution, Competitive Natural Gas Sales and Services, Interstate Pipelines, Field Services and Other Operations. It is headquartered in Houston, Texas.
CenterPoint Energy has a market cap of $8.52 billion in a sector, multi-utilities, where the average company size is $4.30 billion. Its trailing 12-month P/E ratio is 11.13 and its five-year projected price-to-earnings-growth (PEG) ratio is 2.66.
Its projected earnings per share growth for the coming year is 7.02 percent, compared to a sector average of 4.31 percent.
Analysts are generally positive on CNP shares, with buy or outperform calls from Citigroup Investment Research, SunTrust Robinson Humphrey, and Deutsche Bank.
“While we expect the stock to recover from its recent decline, we believe the shares will be largely consolidating the strong 27.8 percent advance that was realized in 2011,” S&P analysts wrote in late March, in support of a neutral rating.
“In addition to the company's increased financial strength and an investor shift into the utilities sector, we believe the strong gain in 2011 largely reflected the Texas Supreme Court's favorable ruling on CEHE's stranded-cost-true-up proceeding, which was remanded back to the Public Utility Commission of Texas.”
CenterPoint Energy next reports on Aug. 2.
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