A History of Outperforming Analyst Forecasts and Beating the Odds: CenterPoint Energy Inc. (CNP)

CenterPoint Energy Inc. (NYSE: CNP) stock fell -0.91% on Friday to $31.66 against a previous-day closing price of $31.95. With 3.85 million shares changed hands, the volume of the stock remained heavier than its average volume of 3.46 million shares. During the session, the Utilities – Regulated Gas company that operates in wider Utilities sector, reached to the highest price of $31.86 whereas the lowest price it dropped to was $31.34. The 52-week range on CNP shows that it touched its highest point at $33.22 and its lowest point at $24.50 during that stretch. It currently has a 1-year price target of $33.71. With its current market cap of 20.02 billion, CNP has annualized dividend of $0.72 while the current yield stands at 2.27%. Beta for the stock currently stands at 0.86.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of CNP was down-trending over the past week, with a drop of -1.62%, but this was down by -0.78% over a month. Three-month performance surged to 12.07% while six-month performance rose 6.89%. The stock gained 28.91% in the past year, while it has gained 13.44% so far this year. A look at the trailing 12-month EPS for CNP yields 1.35 with Next year EPS estimates of 1.50. For the next quarter, that number is 0.31. This implies an EPS growth rate of 62.50% for this year and 8.60% for next year. EPS is expected to decline by -0.40% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of -1.20%.

Float and Shares Shorts:

At present, 629.00 million CNP shares are outstanding with a float of 628.70 million shares on hand for trading. On Aug 30, 2022, short shares totaled 10.42 million, which was 1.66% higher than short shares on Jul 28, 2022. In addition to Mr. David John Lesar B.Sc., C.P.A., CPA, M.B.A. as the firm’s Pres, CEO & Director, Mr. Jason P. Wells serves as its Exec. VP & CFO.

Institutional Ownership:

Through their ownership of 91.72% of CNP’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 62.64% of CNP, in contrast to 27.74% held by mutual funds. Shares owned by individuals account for 1.04%. As the largest shareholder in CNP with 11.52% of the stake, The Vanguard Group, Inc. holds 72,534,335 shares worth 72,534,335. A second-largest stockholder of CNP, Capital Research & Management Co, holds 54,806,071 shares, controlling over 8.71% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in CNP, holding 37,132,054 shares or 5.90% stake. With a 5.95% stake in CNP, the American Mutual Fund is the largest stakeholder. A total of 37,482,503 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.96% of CNP stock, is the second-largest Mutual Fund holder. It holds 18,598,804 shares valued at 586.42 million. Vanguard Mid Cap Index Fund holds 2.30% of the stake in CNP, owning 14,445,994 shares worth 455.48 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, CNP reported revenue of $1.94B and operating income of $351.00M. Over the past year, revenue came in at $8.77B while operating income stood at $1.44B. It generated $190.00M net income for the quarter, which came to $1.59B over the last twelve months. The EBITDA in the recently reported quarter was $677.00M and diluted EPS was $0.28. EBITDA for the full year was $2.81B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for CNP since 19 analysts follow the stock currently. There are 13 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 4 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 1 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With CNP analysts setting a high price target of $37.00 and a low target of $31.00, the average target price over the next 12 months is $33.65. Based on these targets, CNP could surge 16.87% to reach the target high and fall by -2.08% to reach the target low. Reaching the average price target will result in a growth of 6.29% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. CNP will report FY 2022 earnings on 03/02/2023. Analysts have provided yearly estimates in a range of $1.39 being high and $1.37 being low. For CNP, this leads to a yearly average estimate of $1.38. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. CenterPoint Energy Inc. surprised analysts by $0.04 when it reported $0.31 EPS against a consensus estimate of $0.27. The surprise factor in the prior quarter was -$0.01. Based on analyst estimates, the high estimate for the next quarter is $0.39 and the low estimate is $0.30. The average estimate for the next quarter is thus $0.33.

Summary of Insider Activity:

Insiders traded CNP stock several times over the past three months with 1 Buys and 2 Sells. In these transactions, 19,096 shares were bought while 7,987 shares were sold. The number of buy transactions has increased to 23 while that of sell transactions has risen to 15 over the past year. The total number of shares bought during that period was 632,678 while 63,178 shares were sold.

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