Morningstar

CenterPoint Energy Delivers on Growth Targets, Reports Strong Full-Year Results

CenterPoint continues to have one of the best growth profiles among its utilities peers.

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Securities In This Article
CenterPoint Energy Inc
(CNP)

We are maintaining our $29 CenterPoint Energy CNP fair value estimate after the company reported full-year 2022 operating earnings of $1.38 per share compared with $1.64 in 2021, which included $0.37 of divested midstream earnings. Our narrow moat and stable moat trend remain unchanged.

Management reaffirmed 2023 operating earnings guidance of $1.48 to $1.50 per share, in line with our estimate. After the stock has fallen 12% since last September, CenterPoint Energy now trades in line with our fair value estimate.

CenterPoint continues to have one of the best growth profiles among its utilities peers. The company is targeting 8% growth in 2023 and 2024 and 6% to 8% growth through 2030, with expectations to be at the high end of the range. The company’s five-year $20.3 billion capital investment plan and expectations to spend $43 billion over 10 years support our expectations for CenterPoint to meet its growth target.

Management’s portfolio rotation has been a positive for shareholders. The company exited its Energy Transfer stake and sold gas distribution utilities at premium valuations, which have since declined given current macro headwinds. This has shored up the company’s balance sheet without needing significant equity to support its capital investment plan.

On the regulatory front, CenterPoint received approval of a constructive settlement in Minnesota, which allows for a nearly $49 million revenue increase with a 9.39% allowed return on equity. In Indiana, the company plans to file its next integrated resource plan midyear. The previous plan called for solar, wind, and natural gas investments, and we expect a similar need in the updated plan. In Texas, key regulatory and legislative proceeding will determine whether Texas remains constructive for investor-owned utilities.

Earnings during the year were supported by capital investments, higher rates, and favorable weather. Partially offsetting these benefits were higher operating and interest expenses.

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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About the Author

Andrew Bischof, CFA

Strategist
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Andrew Bischof, CFA, CPA, is a strategist, AM Resources, for Morningstar*. He covers electric, gas and water utilities. He conducts comprehensive research and analysis on his covered companies to provide insights into investment opportunities. He assesses financial statements, competitive advantages, and economic indicators to determine a stock’s intrinsic value. He is a five-time Morningstar Outstanding Research Achievement award winner, which recognizes thought leadership and equity research quality as voted on by senior management.

Before joining Morningstar in 2011, Bischof worked in treasury 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. Additionally, he holds the Chartered Financial Analyst® and Certified Public Accountant designations.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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