CenterPoint Energy Inc.CNP

Morningstar Rating

Stock Research and Analysis

by Ryan McLean

The cash-flow stability inherent in CenterPoint Energy's business model helps compensate for a shaky past and a historically challenging regulatory environment, in our opinion. We believe that investors seeking a combination of income and modest capital Read more

Bulls Say

CenterPoint's low-risk, regulated electric and natural gas businesses should continue to generate reliable cash flow.

The firm has received approval for new intrastate pipeline developments that should provide a modest boost to earnings.

The company's size, scale, and relatively diversified earnings stream give CenterPoint greater stability than some peers.

Although struggles continue, the bulk of the company's restructuring and regulatory woes are probably behind it. Read more

Bears Say

An electric rate reduction and freeze through 2010 will weigh down the firm's near-term returns.

With a debt/capital ratio above 80%, CenterPoint is among the most highly leveraged utilities in our coverage universe.

As a mostly regulated utility, CenterPoint is vulnerable to regulatory risk and could be hurt if allowed returns follow the declining trend in market rates. Read more

Strategy

CenterPoint plans to leverage its scale and maintain a low-risk diversified business mix. Regulated T&D operations will continue to account for the bulk of operating income, but the company is expanding Read more

Management

David McClanahan served in various managerial positions at predecessor Reliant Energy before becoming CEO of CenterPoint in 2002. McClanahan and his handpicked management team have helped CenterPoint navigate the difficult transition to deregulation Read more

Profile

CenterPoint Energy owns and operates electricity transmission and distribution assets in Houston, local natural gas distribution assets in Texas and five neighboring states, Read more

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