At US$27.76, Is CenterPoint Energy, Inc. (NYSE:CNP) Worth Looking At Closely?

Today we're going to take a look at the well-established CenterPoint Energy, Inc. (NYSE:CNP). The company's stock saw significant share price movement during recent months on the NYSE, rising to highs of US$31.31 and falling to the lows of US$25.63. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CenterPoint Energy's current trading price of US$27.76 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CenterPoint Energy’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for CenterPoint Energy

What's The Opportunity In CenterPoint Energy?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 1.76% above our intrinsic value, which means if you buy CenterPoint Energy today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $27.28, there’s only an insignificant downside when the price falls to its real value. Furthermore, CenterPoint Energy’s low beta implies that the stock is less volatile than the wider market.

What does the future of CenterPoint Energy look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 24% over the next couple of years, the future seems bright for CenterPoint Energy. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in CNP’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on CNP, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into CenterPoint Energy, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (1 is significant!) that you ought to be aware of before buying any shares in CenterPoint Energy.

If you are no longer interested in CenterPoint Energy, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.