CNP to Benefit From Infrastructure Upgradation & Renewable Expansion

CenterPoint Energy, Inc. CNP has been making systematic investments to strengthen its infrastructure, enhance transmission and distribution networks, upgrade the grid, and expand its renewable energy portfolio to supply clean energy to customers.

The company’s long-term (three to five years) earnings growth rate is projected at 8.86%.

Tailwinds

Rising electricity consumption, both residential and commercial, due to electrification of transportation and buildings, as well as growing AI-based data centres, increased the demand for utility services. This surging demand directly translates to more sales for CenterPoint Energy, as it is responsible for the transmission and distribution of power in its service areas.

CenterPoint Energy has outlined a long-term capital investment plan of $65 billion for 2026-2035 to modernize the grid system. These investments will be used to upgrade underground distribution lines and install self-healing automation devices, enhancing grid resilience and reliability. This will reduce the frequency and duration of outages for customers while simultaneously lowering operating costs.

CNP is expanding its energy portfolio by adding more renewable and clean energy sources. The company expects to have approximately 1,000 megawatts (MW) of wind and solar generation capacity by 2026. Furthermore, it also aims to add 200 MW each of wind and solar resources by 2030, with the potential need for an additional 400 MW of wind resources by 2032.

Headwinds

The tariffs imposed by the U.S. government on import of goods, including solar panels, from almost all its trading partner nations, present a significant threat to the company’s solar project development. These trade measures, along with potential new legislations, retaliatory trade measures or related governmental action, have already, and may continue to, further constrain the supply of solar panels and increase the cost of solar equipment. This could reduce the company’s ability to acquire these items in a timely and cost-efficient manner, leading to higher project costs and potentially impacting the financial viability of the projects.

Price Performance

Over the past year, CNP shares have risen 20.3%, but lagged behind the industry’s growth of 21.1%.

Zacks Rank & Stocks to Consider

CNP currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are Dominion Energy, Inc. D, NextEra Energy, Inc. NEE and OGE Energy Corp. OGE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

D, NEE and OGE have delivered an average earnings surprise of 12.72%, 4.39% and 10.45%, respectively, over the last four quarters.

The Zacks Consensus Estimate for D, NEE and OGE’s 2025 EPS indicates year-over-year growth of 22.74%, 7.58% and 4.11%, respectively.

 

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This article originally published on Zacks Investment Research (zacks.com).

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