CNP Stock: From $23.94 To $24.51 Explanation

By Amit Chowdhry ● April 29, 2021
  • The stock price of CenterPoint Energy, Inc. (NYSE: CNP) increased by 2.38% as it went from a previous close of $23.94 to $24.51. This is why it happened.

The stock price of CenterPoint Energy, Inc. (NYSE: CNP) increased by 2.38% as it went from a previous close of $23.94 to $24.51. Investors appear to be responding positively to CenterPoint Energy announcing it agreed to sell its natural gas utility operations in Arkansas and Oklahoma to Summit Utilities for $2.15 billion in cash, including recovery of about $425 million in cash of unrecovered storm-related incremental natural gas costs incurred in February 2021.

These assets include about 17,000 miles of main pipeline in Arkansas, Oklahoma, and Texarkana serving more than half a million customers residing in high-quality regulatory jurisdictions.

The proceeds of $1.725 billion in cash – after recovery of approximately $425 million in cash unrecovered storm costs – represents a 2.5x multiple of 2020 rate base and a 38x multiple of 2020 earnings. The deal is anticipated to close by the end of 2021, subject to customary closing conditions.

KEY QUOTES:

“I could not be more excited to share this announcement today. Summit Utilities is a seasoned operator of utility assets in the region and the ideal company to acquire these assets. We are excited that Summit has existing businesses in Arkansas and Oklahoma, which will facilitate the transition process for our employees and customers. Summit has an industry track record of being a high-quality operator and we are confident they will continue to provide safe, reliable, and low-cost natural gas service to our customers in Arkansas and Oklahoma.”

“This transaction reflects the hard work and determination of everyone on the CenterPoint team. This valuation represents a landmark multiple for the LDC space and is a clear testament of the premium utility assets in these two jurisdictions. These assets are a proven integral part of the energy supplies in the states in which they operate. The solid customer demand for reliable and efficient distribution of natural gas was only solidified by the recent winter storm events. We believe the price paid for these assets demonstrates that the market is significantly undervaluing the remainder of our natural gas businesses.”

“This transaction reflects the hard work and determination of everyone on the CenterPoint team. This valuation represents a landmark multiple for the LDC space and is a clear testament of the premium utility assets in these two jurisdictions. These assets are a proven integral part of the energy supplies in the states in which they operate. The solid customer demand for reliable and efficient distribution of natural gas was only solidified by the recent winter storm events. We believe the price paid for these assets demonstrates that the market is significantly undervaluing the remainder of our natural gas businesses.”

“We look forward to announcing our first quarter of 2021 financial results during our earnings call on May 6.”

— CenterPoint President and CEO Dave Lesar

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.