QS Research · Michael Burry's Scion Capital analyst template · 2006
CENTERPOINT ENERGY INC (CNP)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $41.24 (close 2026-11-10)
Conclusion: PASS
Conviction low · base case -5% · downside -25% · upside +20%
At $41.24 CNP trades at 23.7x TTM GAAP net income (N30) and 14.3x operating tax-normalized earnings (N38). The independent base at the 22.55x peer median is $39.24 (-5%, N64); using the 2027 non-GAAP EPS guide of $2.07-$2.09 (S31) at today's 23.7x gives $49.30 (+19.5%). Downside: TTM net income $1.16B x 0.90 = $1.044B; x compressed 20.145x = $21.03B; /662.88M = $31.7 (-23%). The Houston load and $70.7B capex plan are real, but -$2.83B FCF and 5.6x net debt/EBITDA leave no margin of safety; pass.
Key numbers
- Share price: $41.24
- Market cap: $27.34B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $9.82B
- EV / EBITDA (TTM): 12.3x
- P/E (TTM): 23.7x
- FCF yield: -10.3%
- Price / book: 2.33x
- Earnings-quality flags (TTM): none flagged
- P/E, operating (tax-normalized) (TTM): 14.3x
- Revenue growth (latest fiscal year): +9.2%
- ROIC (TTM): 5.5%
- WACC: 4.7%
- Economic profit spread: +0.8 pts
The 15 boxes
- ✓ 1. Long-form business notes
CNP is a regulated utility holding company: Houston Electric earns electric transmission and distribution delivery charges from REPs in ERCOT, CERC owns natural gas LDCs in Minnesota, Texas, Indiana and Ohio plus CEIP, and SIGECO is a vertically integrated Indiana electric and gas utility with generation. The portfolio narrowed between the FY2020 and FY2025 10-Ks: the old Midstream Investments/Enable segment is absent in the latest report, ESG was sold by June 30, 2023, Louisiana/Mississippi gas LDCs were sold in 2025, and Ohio CEOH is under a sale agreement, while Posey Solar was added. Latest scale is FY2025 revenue $9.34B, operating income $2.11B and net income to common $1.05B; TTM to Sep 2026 revenue is $9.82B and operating income $2.40B, with capex above operating cash flow.
- ✓ 2. Competitive advantage
No conventional moat: the only competition disclosure covers the gas distribution business, which competes with electricity, other fuels, intrastate pipelines, other distributors and marketers, and its franchises are typically 10-30 years but not exclusive. What the numbers show is a regulated delivery asset whose operating margin expanded from 14.1% in FY2020 ($1.04B/$7.35B) to 22.6% in FY2025 ($2.11B/$9.34B) and 24.4% on the TTM to Sep 30 2026 ($2.40B/$9.82B) — growth in the regulated rate base, funded externally, not pricing power. Return on the equity base is modest (FY2025 net income to common $1.05B against total equity $11.15B, ~9.4%), and capex of $5.65B on the TTM far exceeds operating cash flow of $2.83B, so the 'advantage' is a licence whose allowed return is set by regulators, not by customers' alternatives.
- ✓ 3. 10-Q takeaways
Q3 2026 came in ahead of the prior-year quarter on both bases: GAAP net income $331 million ($0.50/diluted share) versus $293 million ($0.45) in Q3 2025, and non-GAAP $354 million ($0.53) versus $328 million ($0.50). Management raised 2026 non-GAAP EPS guidance to $1.90-$1.92, initiated 2027 guidance at $2.07-$2.09, lifted the 10-year capital plan by $4.0 billion to $70.7 billion, and extended mid-to-high end 7%-9% EPS growth through 2030. The 10-Q states no material change in risk factors versus the combined 2025 Form 10-K. The sourced excerpts contain no revenue, margin, inventory, cash flow or buyback figures, so the sales and liquidity trends cannot be stated from these documents.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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