CenterPoint Energy, Inc. CNP will release third-quarter 2015 financial results before the market opens on Nov 5. In the prior quarter, this utility had reported a negative earnings surprise of 10.00%. Let’s see how things are shaping up at CenterPoint Energy prior to this announcement.
Factors to Consider
CenterPoint Energy is investing substantially to expand its operations so as to cope with increasing utility demand. The company is currently focused on upgrading its infrastructure and improving reliability. CenterPoint Energy’s capital expenditure in the first half of 2015 was around $0.7 billion, up 9.7% year over year due to higher investment in both the Electric Transmission & Distribution and Natural Gas Distribution segments. The company has set a capital outlay of $7.4 billion from 2015 through 2019. These investments will help the company in achieving its target of 4–6% annual EPS growth through 2018, inclusive of its midstream investments.
On the flip side, a significant portion of CenterPoint Energy’s revenue is derived from natural gas sales. Hence, the company’s revenue stream and results of operation are subject to fluctuating weather patterns and changes in natural gas usage.
Earnings Whispers
Our proven model does not conclusively show that CenterPoint Energy is likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 30 cents.
Zacks Rank: The company’s Zacks Rank #4, when combined with a 0.00% ESP, makes an earnings beat unlikely this quarter.
As it is, we caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Ameren Corporation AEE has an earnings ESP of +1.53% and a Zacks Rank #2. It will report quarterly results on Nov 6.
Duke Energy Corporation DUK has an earnings ESP of +0.66% and a Zacks Rank #3. It will report quarterly results on Nov 4.
WEC Energy Group, Inc. WEC has an earnings ESP of +3.39% and a Zacks Rank #3. It will report quarterly results on Nov 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment