Analyzing Centerpoint Energy’s Newly Added Risk Factors

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Texas-based Centerpoint Energy (CNP) is an electric and gas utility serving more than seven million customers across several states. Its subsidiary Enable Midstream Partners recently merged with Energy Transfer (ET). As a result, Centerpoint has received a stake in Energy Transfer as well as $5 million in cash. The company said that the transaction supports its goal of eliminating midstream exposure by the end of 2022.

With this in mind, we used TipRanks to take a look at the latest financial performance and newly added risk factors for Centerpoint. (See Top Smart Score Stocks on TipRanks)

Q3 Financial Results

Centerpoint reported adjusted EPS of $0.33, beating the consensus estimate of $0.28. The company plans to distribute a quarterly cash dividend of $0.17 per share on December 9. (See Centerpoint Energy stock charts on TipRanks)

Risk Factors

According to the new TipRanks Risk Factors tool, Centerpoint’s main risk category is Production, which represents 29% of the total 17 risks identified for the stock. Centerpoint recently updated its profile with two new risk factors under the Legal and Regulatory category, which accounts for 24% of its total risks.

The company informs investors that it has committed to a net-zero emissions target by 2035. However, the carbon emission reduction goals are subject to a number of assumptions that could prove incorrect and lead to actual results being materially different from expectations. The company mentions regulatory changes and the price of carbon offsets as factors that could impact its ability to meet its net-zero emissions goals. Centerpoint cautions that failure to meet its emissions reduction target could harm its reputation and have an unfavorable effect on its financial condition.

Centerpoint tells investors that the government announced two new security directives following the ransomware attack on Colonial Pipeline. It mentions that the directives increase the regulatory requirements for companies that own critical pipelines, which may increase its compliance costs. Centerpoint warns that it may face fines and its business would be adversely impacted if its cybersecurity protective measures were to fail.

The Legal and Regulatory risk factor’s sector average is 20% compared to Centerpoint’s 24%. Centerpoint’s stock has gained 25% since the beginning of 2021.

Analysts’ Take

BMO Capital analyst James Thalacker recently reiterated a Buy rating on Centerpoint stock with a price target of $27.

Consensus among analysts is a Strong Buy based on 7 Buys and 2 Holds. The average Centerpoint Energy price target of $28.56 implies 5.97% upside potential to current levels.

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