CenterPoint Energy (CNP) shares have edged slightly higher in recent trading, gaining around 1% over the past week and more than 8% in the past 3 months. Investors continue to watch how the company’s steady revenue and profit growth support its valuation.
CenterPoint Energy’s share price has picked up meaningful steam in 2024, rising over 24% so far this year and building on strong investor sentiment that is also reflected in an impressive 36% total shareholder return over the past twelve months. While a steady drumbeat of operational progress has quietly supported the rally, it is clear that momentum is still building for the stock as market enthusiasm for utilities with stable growth profiles continues.
With shares reaching new highs and strong fundamentals in place, the crucial question remains: is CenterPoint Energy undervalued at current levels, or has the market already priced in its future growth prospects, leaving little room for upside?
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Most Popular Narrative: 3.9% Undervalued
CenterPoint Energy’s latest fair value calculation stands above the last close, suggesting there is still some upside potential from current levels. This narrative frames the investment case around the company’s aggressive capital investment outlook and the long-term financial runway it provides.
The company announced a $1 billion increase to its capital investment plan through 2030, driven by significant load growth in the Houston Electric service territory. This is expected to bolster capital expenditures and, consequently, long-term revenue and earnings.
Curious what’s powering this edge in valuation? Behind these numbers are bold forecasts of expanding growth channels, profit margin expansion, and a future earnings multiple that is turning heads among utility investors. Can these ambitious targets really hold up? Find out exactly what is driving analyst optimism in the full narrative.
However, regulatory delays or higher financing costs could quickly weigh on earnings and challenge the optimistic outlook that currently supports CenterPoint Energy's valuation.
While the fair value narrative points to a slight undervaluation, market multiples tell a different story. CenterPoint Energy is currently trading at a price-to-earnings ratio of 27.4x, which is well above its peer average of 22.5x and the global industry average of 18.4x. Even against its own fair ratio of 23.4x, the stock appears expensive. This could mean limited upside unless earnings growth accelerates.
If the evidence points you in a different direction, or if you want to run your own numbers, you can craft your own view in just a few minutes with Do it your way.
A great starting point for your CenterPoint Energy research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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