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On Tuesday, Guggenheim maintained a “buy” rating on shares of CenterPoint Energy (NYSE:), but lowered their target price to $32.00 from $33.00. The adjustment came after CenterPoint reported fourth-quarter 2023 profits that were in line with both Guggenheim's expectations and the broader consensus. Additionally, the company confirmed its 2024 guidance.
The company noted that CenterPoint has increased its capital spending forecast by $600 million and reiterated its long-term growth rate of 8% in 2024 and in the high 6-8% range through 2030. Ta. CenterPoint disclosed the sale of its local distribution companies (LDCs) in Louisiana and Mississippi, which matched expectations set out in Guggenheim's 2024 outlook. It was noted that the terms of the sale were that the price-to-earnings ratio was high, the corporate value was low on an interest rate basis, and the net profit was in line with expectations.
CenterPoint has already begun reinvesting anticipated sale proceeds into its core jurisdictions and is exceeding its 2023 capital expenditure guidance. The company also anticipates further capital spending opportunities and reinvestment in areas with fewer regulatory delays. This suggests the deal is expected to be neutral to his earnings per share accretion.
Additionally, CenterPoint has extended the timeline for its $250 million at-the-market (ATM) equity program beyond 2024, indicating that this will be an ongoing requirement. This equity is intended to support our growing capital expenditure plans, including future resiliency plan submissions and comprehensive updates to our capital expenditure plans. This update is expected after the regulatory process in Texas, Indiana, and Minnesota is completed, and management has committed to providing interim updates.
Despite potential headwinds from cash taxes and equity issuance impacts, the company highlighted CenterPoint's industry-leading rate-based trajectory, expected to reach $41 billion by 2030, which represents a growth of more than 9% from 2023 levels. This strong growth supports management's confidence in achieving the long-term upper end of earnings per share growth. Guggenheim's reiterated Buy rating reflects this positive outlook, even though he slightly lowered his price target to $32.00.
Investment Pro Insights
Building on Guggenheim's recent analysis of CenterPoint Energy (NYSE:CNP), InvestingPro provides additional valuable insights for investors. CenterPoint Energy operates with a significant amount of debt, which is an important factor to consider when evaluating a company's financial health. Despite this, the company has maintained its dividend for 54 consecutive years, demonstrating a strong commitment to shareholder returns.
The company has a market capitalization of $17.67 billion and a price-to-earnings ratio (P/E) of 22.19, according to data from InvestingPro. Adjusted for the trailing 12 months as of Q3 2023, the P/E ratio is slightly lower at 20.31. Additionally, the company recorded a 3.37% revenue increase over the same period, indicating a steady increase in top-line profits. Additionally, CenterPoint Energy's EBITDA increased by 11.2%, demonstrating the potential for improved operational efficiency.
For those considering investing in CenterPoint Energy, it's worth noting that 5 analysts have downwardly revised their next-year earnings. While this may raise concerns, it is balanced out by the company's historical profitability, which analysts expect to remain profitable this year.
Investors interested in further analysis and additional information investment pro tips Explore a suite of metrics and insights with InvestingPro. Six more tips are available that provide a comprehensive view of CenterPoint Energy's financial performance and outlook.To access these insights and more, use our coupon code pro news 24 Get an extra 10% off annual or biennial Pro and Pro+ subscriptions.
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