Morningstar Rating

Stock Research and Analysis

by Charles Fishman, CFA

Bulls Say

The 14.5% common dividend increase in the 2014 first quarter is a positive signal of the earnings power of CenterPoint's regulated utilities and anticipated cash distributions from Enable Midstream Partners.
The formation of Enable will allow CenterPoint to reduce its planned capital expenditures, improving free cash flow. This should allow additional annual dividend increases of approximately 4% during the next several years.
Houston Electric's service territory is located in one of the most economically vibrant metro areas in the country with annual customer growth averaging 2%. Read more 

Bears Say

The Transmission and Distribution segment's operating earnings have recently benefited from abnormally high transmission right-of-way revenues. These revenues will likely decline in 2014 and beyond.
Profitability in the competitive natural gas sales and service business remains challenging, with low basis differentials and severe competition.
Low commodity prices and reduced gathering activity continue to pressure earnings from the pipelines and field services infrastructure serving dry gas regions. This will be a headwind for Enable Midstream Partners. Read more 

Management

We assign CenterPoint a standard stewardship rating. The management team has done a good job of working with state regulators to enact favorable mechanisms that reduce regulatory lag. Further, we like that the management team has earmarked the vast   Read more 

Profile

CenterPoint Energy owns a portfolio of energy-related businesses. Its regulated electric utility provides transmission and distribution services to the city of Houston and   Read more 

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