CenterPoint Energy Inc. (CNP) posted earnings of 29 cents per share for the fourth quarter of 2010, in line with the Zacks Consensus Estimate and 2 cents higher than the year-ago quarterly earnings of 27 cents.
CenterPoint Energy posted fiscal 2010 earnings of $1.07 per share, falling short of the Zacks Consensus Estimate of $1.10. However this was greater than the fiscal 2009 earnings of $1.01 per share.
Operational Results
CenterPoint Energy’s total revenues for the reported quarter increased 9.6% to $2.3 billion, compared to $2.1 billion in the year-ago quarter. However, this fell behind the Zacks Consensus Estimate of $2.5 billion. Operating income was $302 million compared to $299 million for the same period of 2009. Overall, net income was $124 million in the reported quarter versus $105 million in the year-ago quarter.
CenterPoint Energy in fiscal 2010 recorded revenue of $8.3 billion lower than the Zacks Consensus Estimate of $9.2 billion and fiscal 2009 revenue of $8.8 billion. Operating income for fiscal 2010 was $1.3 billion compared to $1.1 billion in fiscal 2009. Net income for fiscal 2010 came in at $442 million compared to $372 million in fiscal 2009.
Segment Results
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $90 million for the fourth quarter of 2010. Of this $56 million came from the regulated electric transmission & distribution utility operations (TDU) and $34 million from securitization bonds.
Operating income was $95 million, consisting of $61 million from the TDU and $34 million related to securitization bonds. Operating income for the TDU benefited from higher number of metered customers and increased usage. This more than offset higher operation and maintenance expenses from energy efficiency and system reliability programs.
Natural Gas Distribution
The natural gas distribution segment reported an operating income of $86 million for the fourth quarter of 2010 versus $99 million in the year-ago quarter. The decline in operating income resulted primarily from milder weather, higher operation and maintenance expenses and rate design changes.
Interstate Pipelines
The interstate pipelines segment reported operating income of $63 million in the reported quarter compared to $62 million in the year-ago quarter. Operating income in the reported quarter increased due to higher revenue from firm contracts. This was partially offset by reduced revenues from ancillary services.
Field Services
The field services segment reported operating income of $57 million in the reported quarter compared to $22 million in the year-ago quarter. Revenue growth from higher gathering volumes was partially offset by increased operation and maintenance expenses primarily related to facility expansions.
Competitive Natural Gas Sales and Services
The competitive natural gas sales and services segment was break-even in the reported quarter versus operating income of $21 million in the year-ago quarter. The decline in operating income was due to reduced locational and seasonal price differentials.
In addition, operating income for the fourth quarter of 2010 included charges of $10 million resulting from forward natural gas purchases and sales, compared to charges of $1 million for the same period of 2009.
Financial Condition
CenterPoint Energy reported cash and cash equivalents of $199 million at the end of fiscal 2010 from $740 million at the end of the fiscal 2009. At fiscal-end 2010 the company reported $1.4 billion in cash from operating activities, compared to $1.8 billion at the end of fiscal 2009. Long-term debt decreased to $9.0 billion from $9.1 billion at fiscal-end 2009.
Outlook
CenterPoint Energy affirmed its earnings guidance for fiscal 2011 in the range of $1.04–$1.14 per share.
CenterPoint Energy Inc., with its balanced portfolio of electric and natural gas businesses, provides a diversified risk profile, along with stable earnings and cash flow. Going forward, our bullish outlook for the company is supported by stable regulated operations, higher rates, ongoing infrastructure development projects, a strong balance sheet and a high dividend yield. However, this is partially offset by pending regulatory cases, tepid economy, lower demand for electricity, falling wholesale natural gas prices and a significant presence in a hurricane prone section of the U.S.
We continue to retain our long-term Neutral stance on CenterPoint Energy in the absence of any positive triggers. In the near-term however we assign a Zacks #4 Rank (short-term ‘Sell’ recommendation) for the stock, in line with peers like Public Service Enterprise Group Inc. (PEG) and The AES Corporation (AES).
AES CORP (AES): Free Stock Analysis Report
CENTERPOINT EGY (CNP): Free Stock Analysis Report
PUBLIC SV ENTRP (PEG): Free Stock Analysis Report
Zacks Investment Research
