CenterPoint Energy (CNP): Assessing Valuation After Strong Share Price Gains

CenterPoint Energy (CNP) has been gradually regaining ground, with its stock delivering a solid 27% return year to date and climbing 25% over the past year. The steady gains reflect sustained investor interest over the past three years as well.

See our latest analysis for CenterPoint Energy.

CenterPoint Energy’s 1-year total shareholder return of 25% signals momentum that is hard to ignore, especially as the share price has reached $39.95 following continued strength. With recent weeks quiet on major announcements, the steady climb in both price and returns suggests that investors are recognizing potential for the long term.

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With the share price hovering near all-time highs, investors may be wondering if CenterPoint Energy is trading at a bargain or if the recent rally means the market has already priced in the company’s future growth prospects.

Most Popular Narrative: 6.4% Undervalued

Market optimism is running just ahead of price targets, with CenterPoint Energy’s narrative fair value of $42.67 standing slightly above the last close at $39.95. This setup hints at rising expectations and leaves the question of how much runway is left.

Bullish analysts are encouraged by CenterPoint’s consistent operational execution and the extension of its long-term financial plan, which supports EPS growth targets of 7% to 9% through 2030. Upward revisions to price targets cite strong demand trends, a growing capital plan now totaling $65 billion through 2035, and opportunities from industrial expansion, transmission, population growth, and increased data center load.

Read the complete narrative.

Want to know the growth blueprint driving this target? The secret is ambitious earnings expansion tied to significant capital deployment and a large-scale long-term plan. Which assumptions are fueling this premium? Dive deeper for the full story behind these bold projections, without spoilers.

Result: Fair Value of $42.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, regulatory lag and rising debt costs remain potential catalysts that could challenge the optimistic growth outlook currently priced into CenterPoint’s shares.

Find out about the key risks to this CenterPoint Energy narrative.

Another View: Risk from Market Comparisons

Looking beyond fair value, CenterPoint Energy trades at a price-to-earnings ratio of 25.2x, which is above both its peer average of 21.8x and the global integrated utilities sector at 17.7x. This premium raises questions about valuation risk if market sentiment changes or if industry multiples move toward the fair ratio of 22.5x. Will investors continue to support this higher price, or could momentum slow?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own CenterPoint Energy Narrative

If you want a different angle or believe your own analysis could tell a new story, you can build your own perspective in just a few minutes. Do it your way.

A great starting point for your CenterPoint Energy research is our analysis highlighting 2 key rewards 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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