CenterPoint Energy reported encouraging results in the
first-quarter 2014 with the top and bottom lines surpassing Zacks
Consensus Estimates. Earnings and revenues also improved year over
year due primarily to a colder-than-normal winter and higher
customer counts. Catalysts for future growth include its favorable
liquidity profile backed by a stable cash generation capacity, its
disciplined capital spending and the practice of paying regular
dividends. The company continues to add customers to its portfolio
thanks to the gradual improvement in Houston's economy.
Subsequently, this will help the company improve its future cash
inflows. However, volatility in wholesale
and over-dependence on the retail electric providers for rate
payments may cast a shadow on the company's future growth. Thus, we
maintain our Neutral recommendation on the stock.
Houston, TX-based CenterPoint Energy Inc. (CNP) is a domestic
energy delivery company that includes electric transmission &
distribution, natural gas distribution and competitive natural gas
sales and services operations. The company serves over 5 million
metered customers primarily in Arkansas, Louisiana, Minnesota,
Mississippi, Oklahoma, and Texas. The company owns interest in a
midstream partnership (Midstream Partnership).
CenterPoint Energy's reportable business segments include the
Electric Transmission & Distribution: CenterPoint Houston
engages in electric utility operations. It is a transmission and
distribution electric utility that operates entirely within the
state of Texas. On behalf of the retail electric providers (REPs),
CenterPoint Houston delivers electricity. CenterPoint Houston
provides transmission services under tariffs approved by the Texas
Utility Commission. In Electric Reliability Council of Texas, Inc.
(ERCOT), the end-users purchase their electricity directly from
certificated REPs. CenterPoint Houston delivers electricity to REPs
in its certificated service area by carrying lower-voltage power
from the substation to the retail electric customer. CenterPoint
Houston's operations include construction and maintenance of
electric transmission and distribution facilities, metering
services, outage response services and call center operations.
CenterPoint Houston's electric transmission business, along with
those of other owners of transmission facilities in Texas, supports
the operation of the ERCOT independent system operator (ERCOT
Natural Gas Distribution: Natural Gas Distribution consists of
intrastate natural gas sales to, and natural gas transportation and
distribution for, residential, commercial, industrial and
institutional customers. As of Dec 31, 2014, the segment serves
customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma
Energy Services: The segment, through CenterPoint Energy
Services, Inc. and its subsidiary, CenterPoint Energy Intrastate
Pipelines, LLC, provides variable and fixed-priced physical natural
gas supplies mainly to the commercial and industrial customers and
electric and gas utilities.
Midstream Investments: In Mar 2013, CenterPoint Energy inked a
master formation agreement with OGE Energy Corp. and the affiliates
of ArcLight Capital Partners, LLC to form Enable Midstream Partners
as a private limited partnership. On May 1, 2013, the parties
completed the process and Enable Midstream Partners became the
owner of considerably all of CERC Corp.'s former Interstate
Pipelines and Field Services operations.
Other Operations: This division consists of office buildings and
other real estate used for the company's business and other
corporate activities that support its business operations.
CenterPoint Energy Inc. (CNP): Read the Full
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