CenterPoint Energy Faces Challenges Amid Market Growth
CenterPoint Energy, Inc. (CNP), with a market cap of $19.8 billion, specializes in electric transmission, distribution, and natural gas services. The Houston-based company provides essential services to millions across the U.S., maintaining significant infrastructure to ensure energy reliability.
Stock Performance Lagging Behind Competitors
Over the last 52 weeks, CNP has struggled to keep pace with the broader market. While CNP stock increased by 13.1%, the S&P 500 Index ($SPX) saw a remarkable 36.8% rise. To date in 2024, CNP shares are up just 6.4%, trailing the SPX’s impressive 25.7% gain.
Examining utility sector performance, CNP fell short of the Utilities Select Sector SPDR Fund’s (XLU) 30.2% return over the past year and its 25% year-to-date increase.
Q3 Earnings Show Room for Improvement
In a recent earnings report, CenterPoint’s results were below expectations for the third quarter, with earnings of $0.31 per share and revenues of $1.9 billion. Positive investor sentiment followed, however, as shares rose 1.5% on Oct. 28. The company reaffirmed its 2024 EPS guidance between $1.61 and $1.63, signaling potential stability despite recent hurdles. Notably, their 2025 EPS outlook of $1.74 to $1.76 exceeded analyst forecasts. Updates regarding the Greater Houston Resiliency Initiative, which focuses on grid improvements and automation, also provided reassurance to investors.
Analysts predict that for the current fiscal year ending in December, CNP’s EPS will grow by 8% year-over-year to reach $1.62. Historically, earnings surprises have been mixed, with the company meeting or beating estimates in three out of the last four quarters.
Analyst Ratings and Market Outlook
Among the 15 analysts covering CNP, the consensus rating stands at “Hold.” This consists of three “Strong Buy” ratings, one “Moderate Buy,” 10 “Holds,” and one “Strong Sell.” Compared to three months ago, this rating setup is slightly less optimistic; previously, there were four “Strong Buy” ratings issued.
On Oct. 16, Wells Fargo increased CenterPoint Energy’s price target to $32 and maintained an “Equal Weight” rating, citing a favorable outlook for the sector as macroeconomic conditions stabilize and power demands remain strong leading into the Q3/EEI season.
Currently, CNP’s trading price is below the average price target of $31.08. The highest price target from analysts is $33, suggesting a potential upside of just 8.6% from current levels.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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