Does CenterPoint Face More Correction after Declines since July?



CenterPoint Energy has risen 12% since July

After rising more than 30% since the beginning of the year, CenterPoint Energy (CNP) began a downward fall last month. Since July 22, 2016, it has fallen nearly 12%. Almost all the utility companies are 10%–12% off their annual peaks. On the other hand, broader equities (SPY) rose 8% in the same period.


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CenterPoint Energy so far this year

CenterPoint Energy was an investor favorite in 2016 with one of the highest yields of 4.5% among its utility peers. For the first two reported quarters of 2016, CenterPoint’s earnings were negatively impacted due to its midstream investment in Enable Midstream Partners (ENBL). However, that didn’t impact the surge in its stock price. CenterPoint management is in the process of reviewing this investment for a sale or a spin-off.

Its large exposure to commodity prices may make CenterPoint Energy more vulnerable in the short term. Mid-sized utilities rose more than their large-cap peers in the epic rally this year. This may make mid-sized utilities more sensitive for profit booking and may result in a steeper correction.

In this series

What’s next for CenterPoint Energy stock? Is it currently fairly valued? How is it managing its revenue and earnings growth? Is its leverage concerning?Will it pay dividends higher than the industry average?

We’ll try to answer these questions in this series by analyzing the company’s financial as well as operational performances. We’ll also focus on historical dividend trends and analyst expectations.


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