CENTERPOINT ENERGY INC (CNP): what the price requires

The current priced-in claim for CENTERPOINT ENERGY INC (CNP) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/CNP

Headline

FieldValue
TickerCNP
CompanyCENTERPOINT ENERGY INC
Current price$44.19/sh
CompositionElectric 52% / Natural Gas 48%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin today22.7%
Multiple paid23x operating income

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 5.5% cost of capital with 4% terminal growth over a 5-year stage (computed at the 5.5% minimum rate; the CAPM rate 5.4% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~21.1%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.85σ
cohort percentile (of 70 peers)64
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power/growth-DCF land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.50x5expensive
Earnings2.51x3expensive
Relative1.24x5expensive
Growth1.71x1expensive

Families that justify the price: Relative Families that call it expensive: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.6%); the inversion above states its own rate.

Per-Model Detail (n=14)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——noReference only (OCF-based, capex excluded): OCF $2.4B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$37.001.19xyesP/E 20x (static sector reference · 2026-04), scenarios: 16.7x / 20.0x / 23.3x (bear / base = reference held flat / bull), EV/EBITDA 13x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$17.562.52xyesBV/sh $17.36, ROE (TTM) 9.4%, ke 9.3%
Two-Stage Excess ReturnAsset$17.662.50xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$25.871.71xyesRev $9.4B, growth 5% (input: historical growth; tapered), Terminal P/S: 2.6x / 3.1x / 3.6x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$19.602.25xyesEPS $1.63, growth 12% (input: historical EPS growth), PEG=2.26 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$3.2913.43xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.80B × (1−23%) / WACC 5.6% → EPV (no growth)
Residual IncomeAsset$17.672.50xyesBV $17.36 + 5yr PV of (ROE (TTM) 9.4% − Kₑ 9.3%) × BV; BV grows 6.1%/yr
Graham NumberAsset$25.231.75xyes√(22.5 × EPS $1.63 × BVPS $17.36) — Graham's conservative floor
EV/EBITDA RelativeRelative$40.011.10xyesEBITDA $3.71B × sector EV/EBITDA 13.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$44.470.99xyesEPS $1.63 × (8.5 + 2×12.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$4.709.40xyesBV $17.36 × (ROIC 1.5% / WACC 5.6%)
P/Sales SectorRelative$35.551.24xyesRevenue $9.38B × sector P/S 2.5x
PEG Fair ValueRelative$29.411.50xyesEPS $1.63 × (PEG 1.5 × growth 12.0% (input: historical EPS growth)) → PE 18.0x
Earnings YieldEarnings$17.622.51xyesEPS $1.63 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$23.7b
Net debt / NOPAT (after-tax)13.78x
Net debt / operating income (pre-tax)10.65x
Interest coverage2.3x
Share count CAGR (dilution)1.1%
Burning cashno

Bullet Takeaways

CenterPoint is a regulated electric and natural gas utility, so its value lives in rate base, not in a cash-flow multiple. Earnings grow as the company invests approved capital and earns an allowed return on it; the company is guiding to roughly 8% non-GAAP EPS growth in 2026 and a 7% to 9% long-term annual target through 2035.

The engine is a $65.5 billion ten-year capital plan against an approximately $33 billion rate base, supercharged by Houston load growth: 12.2 gigawatts of firmly committed industrial load and 8 gigawatts of data-center demand expected to be energized by 2029.

The price reflects this. At $42.82 the stock trades above where standard earnings, asset, and DCF methods land, because those methods read a 9.4% trailing return on equity against a heavy balance sheet rather than the future rate base. Net debt of about $23.7 billion and interest coverage near 2.2x are the constraint a rate-base growth plan has to fund.

Bull Case

Standard valuation models miss what makes a regulated utility tick. A DCF discounts free cash flow, but CenterPoint deliberately runs negative free cash flow because it spends more on capital investment than it earns, by design, since every approved dollar of investment becomes rate base on which it earns a regulated return. An asset model reads book value of about $17 per share and a return on equity near 9.4% and concludes the stock should trade near book; that ignores that the company is about to grow that asset base for a decade. The right frame is the rate base itself. CenterPoint guides to a $65.5 billion ten-year capital plan intended to enhance the safety, reliability and resiliency of its systems and deliver consistent value across its jurisdictions (FY2025 10-K, accession 0001130310-26-000008), against a current rate base of roughly $33 billion. A utility that nearly doubles its earning asset base over ten years grows earnings mechanically, which is why management can guide to 7% to 9% annual growth through 2035.

The demand behind the plan is unusually concrete for a utility. CenterPoint has announced 12.2 gigawatts of firmly committed industrial load at Houston Electric and expects 8 gigawatts of data-center load to be energized by 2029. That sits on top of residential meter growth the company expects to track its long-term trend of about 2% annually, with a significant portion of the new capital plan aimed squarely at supporting that growth (FY2025 10-K, accession 0001130310-26-000008). Houston is one of the few service territories in the country with a genuine industrial and data-center load surge, and CenterPoint is the wires company that has to be built to serve it. The first-quarter 2026 print backed the trajectory, with non-GAAP EPS of $0.56 and full-year guidance reaffirmed at $1.89 to $1.91, about 8% growth over 2025.

The regulatory model that frustrates the asset-value methods is also what makes the cash flows bankable. CenterPoint accounts for its regulated operations on the premise that rates are designed to recover the costs of providing service and that the competitive environment makes it probable those rates can be charged and collected (FY2025 10-K, accession 0001130310-26-000008). In the 2024 Houston Electric general rate case the company sought a 10.4% return on equity and reached a settlement with the Texas commission (accession 0001130310-26-000008), the normal cadence of a utility converting capital into allowed returns. For an investor, the package is a visible, multi-decade earnings-growth schedule funded by approved investment, with a dividend on top. The reason the price sits above the textbook asset and earnings models is that those models are not built to value a growing rate base, and on the rate-base frame the growth is what is being bought.

Bear Case

The valuation methods disagree sharply, and the conservative ones are saying something the rate-base story papers over. The asset-based reads, simple and two-stage excess return and residual income, all land near $17 to $18, less than half the $42.82 price (June 27, 2026), because they value the business on its current book and a return on equity (about 9.4%) that barely exceeds the cost of equity (about 9.3%). The earnings-power read, normalizing operating income, lands far lower still. Only the relative-multiple methods, pricing the stock at a sector-median P/E near 20x, get close to the tape.

The balance sheet is the reason the model disagreement matters. CenterPoint carries about $23.7 billion of net debt against trailing operating income near $2.1 billion, which is roughly 11x, with interest coverage around 2.2x. That leverage is normal for a rate-base utility, but it means the entire growth plan depends on continuous access to debt and equity markets on acceptable terms. The company itself flags that the upward trend in spending is likely to continue and could result in more frequent rate cases and cost-recovery requests, all of which could produce adverse cost-recovery determinations or face resistance from customers and stakeholders (FY2025 10-K, accession 0001130310-26-000008). A higher-for-longer rate environment raises both the interest bill and the cost of new equity, which is the most direct threat to a plan that runs on external financing.

The regulatory dependence is the structural risk under everything. The same 2024 Houston Electric rate case shows the gap between ask and award: the company filed for a 10.4% return on equity and settled for terms set by the commission (FY2025 10-K, accession 0001130310-26-000008), and it states that future commission decisions will impact the amount of allowable costs and return on invested capital included in rates, with refunds possible (accession 0001130310-26-000008). The Houston load-growth story is genuine, but a meaningful share of it is firmly committed, not yet energized; data-center plans can slip, and large industrial customers are not under long-term contract (accession 0001130310-26-000008). If the load surge arrives slower than 2029, if regulators trim allowed returns to protect customers from rising bills, or if financing costs climb, the earnings schedule the price is paying for stretches out, and the asset-anchored methods near $18 become the more honest read.

Valuation

The methods split into two camps and the split is the information. The asset-based family, simple and two-stage excess return and residual income, lands near $17 to $18, because book value is about $17 per share and the trailing return on equity of 9.4% sits a hair above the 9.3% cost of equity, leaving almost no excess return to capitalize. The earnings-power and ROIC-justified reads land even lower, an artifact of dividing a normalized operating profit by a low utility cost of capital and of a reported short-run ROIC that does not reflect the rate base coming online. The relative-multiple family is the only one that reaches the price: a sector-median P/E near 20x lands around $37, and the sector EV/EBITDA read lands near $40. So the price near $43 is consistent with how utilities trade on multiples, but well above how they value on present book and present earnings.

Reading the price as an assumption, the inversion flags this name as below its solve floor with low reliability, which is the model correctly recognizing that a regulated rate-base utility is not well described by a single operating-growth solve. The better frame is the one management gives: a roughly $33 billion rate base growing toward the back end of a $65.5 billion ten-year plan, producing 7% to 9% annual EPS growth. At about 22x to 23x earnings of roughly $1.90, the stock prices in that growth schedule largely delivering. The valuation is therefore not cheap on any backward-looking method; it is a forward rate-base bet, and the spread between the $18 asset-anchored reads and the $43 price is precisely the value the market assigns to a decade of approved, Houston-load-driven investment actually coming through.

Catalysts

First-quarter 2026 set the recent baseline: GAAP EPS of $0.48 and non-GAAP EPS of $0.56. CenterPoint reaffirmed full-year 2026 non-GAAP EPS guidance of $1.89 to $1.91, about 8% growth over 2025's $1.76, and reiterated a long-term annual growth target of 7% to 9% through 2035, expecting to deliver at the mid-to-high end during 2026 to 2028. (Sources: CenterPoint Q1 2026 results via Business Wire and Morningstar; Q1 2026 slides via Investing.com.)

The defining catalyst is the demand outlook. CenterPoint announced 12.2 gigawatts of firmly committed industrial load at Houston Electric and expects 8 gigawatts of data-center load to be energized by 2029. Those projects underpin the $65.5 billion ten-year capital plan, which spans the Greater Houston Resiliency Initiative, the System Resiliency Plan, the Houston Downtown Revitalization Project, industrial load-growth projects, and 765-kilovolt transmission. The current rate base is approximately $33 billion across all jurisdictions. (Source: CenterPoint Q1 2026 slides and capital-plan disclosure via Investing.com.)

The forward watch items are regulatory and financing milestones: progress on pending and upcoming rate cases that set allowed returns, the pace at which committed industrial and data-center load actually energizes against the 2029 target, and the terms on which the company funds the plan in debt and equity markets. Each is a direct input into whether the guided growth rate holds. (Sources: CenterPoint Q1 2026 guidance reaffirmation via StreetInsider; grid-resilience and guidance overview via Ad-Hoc-News.)

Peer Cohorts (Per Segment, With Filing Citations)

Electric (reported)

Natural Gas (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive CNP report on boothcheck