Centerpoint Energy Inc (NYSE: CNP)

Sector: Utilities Industry: Utilities - Regulated Electric CIK: 0001130310
Market Cap 27.97 Bn
P/B 2.53
P/E 26.99
P/S 3.07
ROIC (Qtr) 6.24
Div Yield % 0.49
Rev 1y % (Qtr) 7.11
Total Debt (Qtr) 22.94 Bn
Debt/Equity (Qtr) 2.08
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About

Investment thesis

Bull case

  • Tangible assets of 41.11B provide robust 33.23x coverage of other current liabilities 1.24B, indicating strong asset backing.
  • Free cash flow of (2.80B) provides excellent 4.92x coverage of dividends (569M), indicating sustainable shareholder returns.
  • Operating cash flow of 2.60B provides strong 3.33x coverage of inventory 782M, indicating efficient inventory management.
  • Strong tangible asset base of 41.11B provides 47.69x coverage of acquisition spending 862M, enabling strategic growth.
  • Strong tangible asset base of 41.11B provides 10.43x coverage of intangibles 3.94B, indicating robust asset quality.

Bear case

  • Operating cash flow of 2.60B barely covers its investment activities of (4.53B), with a coverage ratio of -0.57, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 37M against inventory of 782M, the 0.05 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 2.60B provides thin coverage of dividend payments of (569M) with a -4.57 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 37M provide limited coverage of acquisition spending of 862M, which is 0.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Short-term investments of 579M significantly exceed cash reserves of 37M, which is 15.65x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.

Peer comparison

Companies in the Utilities - Regulated Electric
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NEE Nextera Energy Inc 191.44 Bn 28.01 6.98 95.62 Bn
2 SO Southern Co 97.42 Bn 30.98 4.46 73.75 Bn
3 AEP American Electric Power Co Inc 64.38 Bn 33.83 4.24 0.00 Bn
4 DUK Duke Energy CORP 56.47 Bn 30.61 3.87 89.65 Bn
5 EXC Exelon Corp 48.53 Bn 17.53 2.00 50.08 Bn
6 ETR Entergy Corp /De/ 45.74 Bn 25.29 3.59 30.45 Bn
7 PEG Public Service Enterprise Group Inc 43.93 Bn 35.35 4.41 23.51 Bn
8 XEL Xcel Energy Inc 41.10 Bn 37.21 3.75 35.52 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.12 1.01
EV to Cash from Ops. EV/CFO 19.31 12.45
EV to Debt EV to Debt 2.19 171.92
EV to EBIT EV/EBIT 23.98 19.12
EV to EBITDA EV/EBITDA 14.22 15.67
EV to Free Cash Flow [EV/FCF] EV/FCF -17.94 -28.25
EV to Market Cap EV to Market Cap 1.80 1.84
EV to Revenue EV/Rev 5.51 4.72
Price to Book Value [P/B] P/B 2.53 2.60
Price to Earnings [P/E] P/E 26.99 18.53
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.82 1.94
Dividend Payout Ratio % Div Payout % (Qtr) 13.30 62.23
Dividend per Basic Share Div per Share (Qtr) 0.21 2.02
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -4.90 -218.37
Interest Coverage Int. cover (Qtr) 2.33 2.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -50.91 -68.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -66.96 73.92
Dividend Growth (1y) % Div 1y % (Qtr) -73.75 4.05
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 5.94 15.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 8.01 13.33
EBIT Growth (1y) % EBIT 1y % (Qtr) 12.15 15.81
EBT Growth (1y) % EBT 1y % (Qtr) 13.89 19.29
EPS Growth (1y) % EPS 1y % (Qtr) 4.64 21.26
FCF Growth (1y) % FCF 1y % (Qtr) -84.09 -35.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.01 11.97
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.20 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.07 0.11
Cash Ratio Cash Ratio (Qtr) 0.01 0.98
Current Ratio Curr Ratio (Qtr) 0.51 2.72
Debt to Equity Ratio Debt/Equity (Qtr) 2.08 1.45
Interest Cover Ratio Int Coverage (Qtr) 2.33 2.83
Times Interest Earned Times Interest Earned (Qtr) 2.33 2.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 39.20 37.94
EBIT Margin % EBIT Margin % (Qtr) 22.99 316.94
EBT Margin % EBT Margin % (Qtr) 13.13 14.36
Gross Margin % Gross Margin % (Qtr) 38.80 41.20
Net Profit Margin % Net Margin % (Qtr) 11.40 12.57