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CenterPoint Energy Earnings: Full-Year 2023 Guidance Raised; 2024 Guidance In Line With Expectations

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We are maintaining our $30 fair value estimate and narrow moat rating for CenterPoint Energy CNP after the company reported third-quarter operating earnings of $0.40 per share compared with $0.32 in the same year-ago period.

Management increased its 2023 operating EPS guidance to $1.49 to $1.51, up from $1.48 to $1.50. Our estimate remains in line with management’s revised guidance.

The company initiated 2024 earnings guidance of $1.61 to $1.63 per share, in line with our $1.61 estimate. The company’s 8% growth in 2024 and 6%-8% annual growth rate target from 2025 through 2030 remains unchanged. We expect the company to achieve its growth target, which is among the highest in the utilities sector.

Management once again increased its five-year capital investment plan by $500 million to $21.2 billion, continuing an impressive trend of management continuing to find and execute on additional investment opportunities. We previously included an incremental $400 million in our estimates, leaving our fair value unchanged.

We think management will continue to find additional capital investments beyond its current plan. Most of the investment will be directed toward Houston, where high customer growth and operating cost savings have kept customer costs flat.

The company plans to issue $250 million of equity to support its plan. With CenterPoint’s stock trading at a slight discount to our fair value estimate as of Oct. 26, the equity issuance has no fair value impact.

The company also announced that President and COO Jason Wells will replace CEO David Lesar. We think Wells is a strong replacement. Lesar should be commended for repositioning CenterPoint to focus on its regulated utilities and delivering strong financial results during his tenure. We think Wells will continue this strategy.

Earnings in the quarter benefited from favorable weather, continued investments, flat operating expenses, and strong customer growth. This was partially offset by higher interest expense.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Andrew Bischof

Strategist
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Andrew Bischof, CFA, CPA, is an equity strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers regulated utilities, diversified utilities, and independent power producers.

Before joining Morningstar in 2011, Bischof was a senior treasury analyst for Mead Johnson Nutrition. Previously, he was a group audit officer for Bank of America in Chicago, and before that, an auditor for Ernst & Young.

Bischof holds a bachelor’s degree in business administration and accounting and a master’s degree in accounting from the University of Wisconsin. He also holds a master’s degree in business administration, with a concentration in finance, from Indiana University’s Kelley School of Business and the Chartered Financial Analyst® and Certified Public Accountant designations.

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