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CenterPoint Energy Inc. (CNP) is an energy delivery company with electric transmission and distribution, power generation, and natural gas distribution operations that serve more than seven million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma, and Texas.
The company generated about 80% of its income from Houston Electric during the third quarter of 2020 with the remaining income from Indiana Electric and Natural Gas Distribution. Meanwhile, the company’s midstream investments generated a $62 million loss in the quarter.
The company also plans to reduce its dependence on coal from 81% in 2020 to just 15% of its resource mix by 2025. Renewable energy is projected to grow from 6% to 54% of its resource mix while natural gas is projected to grow from 13% to 31% of its resource mix.
CenterPoint Energy reported third quarter financial results that fell short of analyst expectations, but despite the underperformance, analysts believe that the company’s valuation is attractive relative to its peers at current levels.
Goldman Sachs recently noted that the company’s implied 2.5x discount to peers was unwarranted given above average EPS and DPS growth and its plans to reduce or eliminate its midstream exposure. Shortly after, Evercore ISI said that it likes value over quality and cited CenterPoint as a good value in the energy and utility sector.
The company raised its quarterly dividend by 6.7% to $0.16 per share, which represents a nearly 3% forward yield, as it simultaneously strengthened its balance sheet. The dividend is payable on March 11, 2021 to shareholders on record as of February 18, 2021.
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