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What's in Store for CenterPoint Energy (CNP) in Q3 Earnings?

CenterPoint Energy, Inc. CNP will release third-quarter 2017 financial results before the market opens on Nov 3.

In the last quarter, the company pulled off a positive earnings surprise of 38.10%. Moreover, it outperformed the Zacks Consensus Estimate in three of the trailing four quarters, with an average earnings beat of 10.34%.

Let’s see how things are shaping up for the company prior to this announcement.

Factors at Play

During the third quarter, one of the most devastating tropical storms in 50 years – Hurricane Harvey hit the city of Houston, TX – which is the primary service region of CenterPoint .

Harvey’s impact on the state’s properties hampered the smooth flow of electricity through the transmission lines, leading to widespread outages. Though the company didn’t announce any significant damage caused to its power plants, it is expected that the effect of the storm might weigh down on its profitability in the third quarter.

On the brighter note, CenterPoint had witnessed increased customer count and throughput during second-quarter 2017, primarily due to acquisitions of Atmos Energy Marketing (AEM) and the Energy Services business. Going ahead, similar solid performance from Energy Services is expected in third quarter and beyond, buoyed by increased operating income.

Moreover, the unemployment rate in Ameren’s service territories is better than the national average. An improving economy is likely to boost future utility demand in the state, thereby improving the company’s performance.

Notably, the Zacks Consensus Estimate of 41 cents for third-quarter earnings projects a decline of 1%. Meanwhile, the same for revenues of $2.02 billion hints at an improvement of almost 6.7% on a year-over-year basis.

Earnings Whispers

Our proven model does not show that CenterPoint is likely to beat earnings this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here, as you will see below.

Zacks ESP: CenterPoint has an Earnings ESP of -0.25%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CenterPoint carries a Zacks Rank #2, which increases the predictive power of ESP. However, the negative Earnings ESP makes surprise prediction difficult.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few operators in the electric utility space that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

NRG Energy, Inc. NRG will report next quarterly results on Nov 2. The company has an Earnings ESP of +7.92% and a Zacks Rank #3. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Exelon Corporation EXC has an Earnings ESP of +0.48% and a Zacks Rank #3. The company is scheduled to report next quarterly results on Nov 2.

Chesapeake Utilities Corporation CPK has an Earnings ESP of +1.45% and a Zacks Rank #3. The company is slated to release next quarterly results on Nov 9.

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CenterPoint Energy, Inc. (CNP): Free Stock Analysis Report
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