Intrinsic value of CenterPoint Energy - CNP

Previous Close

$28.13

  Intrinsic Value

$45.00

stock screener

  Rating & Target

str. buy

+60%

Previous close

$28.13

 
Intrinsic value

$45.00

 
Up/down potential

+60%

 
Rating

str. buy

We calculate the intrinsic value of CNP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  27.70
  25.43
  23.39
  21.55
  19.89
  18.40
  17.06
  15.86
  14.77
  13.79
  12.92
  12.12
  11.41
  10.77
  10.19
  9.67
  9.21
  8.79
  8.41
  8.07
  7.76
  7.48
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
Revenue, $m
  12,277
  15,399
  19,001
  23,095
  27,689
  32,785
  38,380
  44,465
  51,034
  58,074
  65,574
  73,524
  81,913
  90,736
  99,984
  109,657
  119,752
  130,273
  141,225
  152,617
  164,460
  176,768
  189,558
  202,849
  216,665
  231,029
  245,968
  261,514
  277,696
  294,550
Variable operating expenses, $m
  10,694
  13,391
  16,503
  20,040
  24,010
  28,412
  33,246
  38,504
  44,179
  50,261
  56,655
  63,523
  70,772
  78,394
  86,385
  94,741
  103,463
  112,553
  122,016
  131,858
  142,090
  152,724
  163,774
  175,258
  187,194
  199,605
  212,512
  225,943
  239,924
  254,486
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  10,694
  13,391
  16,503
  20,040
  24,010
  28,412
  33,246
  38,504
  44,179
  50,261
  56,655
  63,523
  70,772
  78,394
  86,385
  94,741
  103,463
  112,553
  122,016
  131,858
  142,090
  152,724
  163,774
  175,258
  187,194
  199,605
  212,512
  225,943
  239,924
  254,486
Operating income, $m
  1,583
  2,008
  2,498
  3,055
  3,680
  4,373
  5,134
  5,961
  6,855
  7,812
  8,919
  10,001
  11,142
  12,342
  13,600
  14,915
  16,288
  17,719
  19,209
  20,759
  22,370
  24,044
  25,783
  27,591
  29,470
  31,424
  33,456
  35,571
  37,772
  40,064
EBITDA, $m
  3,400
  4,264
  5,262
  6,395
  7,668
  9,079
  10,628
  12,313
  14,132
  16,082
  18,159
  20,360
  22,683
  25,126
  27,687
  30,366
  33,161
  36,075
  39,108
  42,262
  45,542
  48,950
  52,492
  56,173
  59,998
  63,976
  68,113
  72,418
  76,899
  81,566
Interest expense (income), $m
  406
  513
  783
  1,100
  1,465
  1,880
  2,345
  2,862
  3,429
  4,046
  4,712
  5,425
  6,186
  6,991
  7,842
  8,736
  9,673
  10,654
  11,677
  12,744
  13,854
  15,008
  16,209
  17,456
  18,753
  20,100
  21,500
  22,956
  24,471
  26,046
  27,687
Earnings before tax, $m
  1,070
  1,225
  1,398
  1,590
  1,800
  2,027
  2,272
  2,532
  2,809
  3,101
  3,494
  3,815
  4,150
  4,500
  4,864
  5,242
  5,635
  6,042
  6,466
  6,905
  7,361
  7,835
  8,327
  8,838
  9,370
  9,924
  10,500
  11,100
  11,725
  12,378
Tax expense, $m
  289
  331
  377
  429
  486
  547
  613
  684
  758
  837
  943
  1,030
  1,121
  1,215
  1,313
  1,415
  1,521
  1,631
  1,746
  1,864
  1,988
  2,115
  2,248
  2,386
  2,530
  2,679
  2,835
  2,997
  3,166
  3,342
Net income, $m
  781
  894
  1,021
  1,161
  1,314
  1,480
  1,658
  1,849
  2,050
  2,263
  2,551
  2,785
  3,030
  3,285
  3,551
  3,827
  4,113
  4,411
  4,720
  5,041
  5,374
  5,719
  6,079
  6,452
  6,840
  7,244
  7,665
  8,103
  8,560
  9,036

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  29,024
  36,405
  44,919
  54,598
  65,459
  77,506
  90,732
  105,119
  120,647
  137,290
  155,021
  173,815
  193,649
  214,505
  236,370
  259,235
  283,101
  307,974
  333,866
  360,797
  388,794
  417,890
  448,127
  479,549
  512,209
  546,167
  581,486
  618,236
  656,492
  696,336
Adjusted assets (=assets-cash), $m
  29,024
  36,405
  44,919
  54,598
  65,459
  77,506
  90,732
  105,119
  120,647
  137,290
  155,021
  173,815
  193,649
  214,505
  236,370
  259,235
  283,101
  307,974
  333,866
  360,797
  388,794
  417,890
  448,127
  479,549
  512,209
  546,167
  581,486
  618,236
  656,492
  696,336
Revenue / Adjusted assets
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
Average production assets, $m
  17,298
  21,697
  26,772
  32,541
  39,014
  46,194
  54,077
  62,652
  71,907
  81,826
  92,393
  103,595
  115,416
  127,846
  140,878
  154,506
  168,730
  183,555
  198,986
  215,037
  231,724
  249,066
  267,087
  285,814
  305,280
  325,519
  346,570
  368,473
  391,274
  415,021
Working capital, $m
  -724
  -909
  -1,121
  -1,363
  -1,634
  -1,934
  -2,264
  -2,623
  -3,011
  -3,426
  -3,869
  -4,338
  -4,833
  -5,353
  -5,899
  -6,470
  -7,065
  -7,686
  -8,332
  -9,004
  -9,703
  -10,429
  -11,184
  -11,968
  -12,783
  -13,631
  -14,512
  -15,429
  -16,384
  -17,378
Total debt, $m
  14,505
  20,365
  27,125
  34,811
  43,435
  53,000
  63,501
  74,925
  87,254
  100,468
  114,546
  129,469
  145,217
  161,777
  179,137
  197,293
  216,242
  235,991
  256,549
  277,933
  300,162
  323,265
  347,272
  372,222
  398,154
  425,117
  453,160
  482,339
  512,715
  544,351
Total liabilities, $m
  23,045
  28,905
  35,665
  43,351
  51,975
  61,540
  72,041
  83,465
  95,794
  109,008
  123,086
  138,009
  153,757
  170,317
  187,677
  205,833
  224,782
  244,531
  265,089
  286,473
  308,702
  331,805
  355,812
  380,762
  406,694
  433,657
  461,700
  490,879
  521,255
  552,891
Total equity, $m
  5,979
  7,499
  9,253
  11,247
  13,485
  15,966
  18,691
  21,655
  24,853
  28,282
  31,934
  35,806
  39,892
  44,188
  48,692
  53,402
  58,319
  63,443
  68,776
  74,324
  80,092
  86,085
  92,314
  98,787
  105,515
  112,510
  119,786
  127,357
  135,237
  143,445
Total liabilities and equity, $m
  29,024
  36,404
  44,918
  54,598
  65,460
  77,506
  90,732
  105,120
  120,647
  137,290
  155,020
  173,815
  193,649
  214,505
  236,369
  259,235
  283,101
  307,974
  333,865
  360,797
  388,794
  417,890
  448,126
  479,549
  512,209
  546,167
  581,486
  618,236
  656,492
  696,336
Debt-to-equity ratio
  2.430
  2.720
  2.930
  3.100
  3.220
  3.320
  3.400
  3.460
  3.510
  3.550
  3.590
  3.620
  3.640
  3.660
  3.680
  3.690
  3.710
  3.720
  3.730
  3.740
  3.750
  3.760
  3.760
  3.770
  3.770
  3.780
  3.780
  3.790
  3.790
  3.790
Adjusted equity ratio
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  781
  894
  1,021
  1,161
  1,314
  1,480
  1,658
  1,849
  2,050
  2,263
  2,551
  2,785
  3,030
  3,285
  3,551
  3,827
  4,113
  4,411
  4,720
  5,041
  5,374
  5,719
  6,079
  6,452
  6,840
  7,244
  7,665
  8,103
  8,560
  9,036
Depreciation, amort., depletion, $m
  1,817
  2,256
  2,764
  3,341
  3,988
  4,706
  5,494
  6,352
  7,277
  8,269
  9,239
  10,359
  11,542
  12,785
  14,088
  15,451
  16,873
  18,355
  19,899
  21,504
  23,172
  24,907
  26,709
  28,581
  30,528
  32,552
  34,657
  36,847
  39,127
  41,502
Funds from operations, $m
  2,597
  3,150
  3,784
  4,501
  5,302
  6,186
  7,153
  8,201
  9,328
  10,533
  11,790
  13,144
  14,571
  16,070
  17,638
  19,277
  20,986
  22,766
  24,619
  26,544
  28,546
  30,626
  32,787
  35,033
  37,368
  39,796
  42,322
  44,950
  47,687
  50,538
Change in working capital, $m
  -157
  -184
  -212
  -242
  -271
  -301
  -330
  -359
  -388
  -415
  -443
  -469
  -495
  -521
  -546
  -571
  -596
  -621
  -646
  -672
  -699
  -726
  -755
  -784
  -815
  -847
  -881
  -917
  -955
  -994
Cash from operations, $m
  2,755
  3,335
  3,997
  4,743
  5,573
  6,487
  7,483
  8,560
  9,715
  10,948
  12,232
  13,613
  15,066
  16,590
  18,184
  19,848
  21,582
  23,387
  25,265
  27,217
  29,245
  31,352
  33,542
  35,818
  38,183
  40,644
  43,203
  45,867
  48,642
  51,532
Maintenance CAPEX, $m
  -1,355
  -1,730
  -2,170
  -2,677
  -3,254
  -3,901
  -4,619
  -5,408
  -6,265
  -7,191
  -8,183
  -9,239
  -10,359
  -11,542
  -12,785
  -14,088
  -15,451
  -16,873
  -18,355
  -19,899
  -21,504
  -23,172
  -24,907
  -26,709
  -28,581
  -30,528
  -32,552
  -34,657
  -36,847
  -39,127
New CAPEX, $m
  -3,752
  -4,399
  -5,074
  -5,769
  -6,473
  -7,180
  -7,882
  -8,575
  -9,255
  -9,919
  -10,568
  -11,201
  -11,821
  -12,430
  -13,031
  -13,628
  -14,224
  -14,824
  -15,432
  -16,051
  -16,686
  -17,342
  -18,021
  -18,728
  -19,466
  -20,239
  -21,050
  -21,903
  -22,801
  -23,747
Cash from investing activities, $m
  -5,107
  -6,129
  -7,244
  -8,446
  -9,727
  -11,081
  -12,501
  -13,983
  -15,520
  -17,110
  -18,751
  -20,440
  -22,180
  -23,972
  -25,816
  -27,716
  -29,675
  -31,697
  -33,787
  -35,950
  -38,190
  -40,514
  -42,928
  -45,437
  -48,047
  -50,767
  -53,602
  -56,560
  -59,648
  -62,874
Free cash flow, $m
  -2,352
  -2,794
  -3,247
  -3,703
  -4,155
  -4,595
  -5,019
  -5,423
  -5,805
  -6,162
  -6,518
  -6,827
  -7,114
  -7,382
  -7,632
  -7,868
  -8,093
  -8,310
  -8,522
  -8,733
  -8,945
  -9,162
  -9,386
  -9,619
  -9,864
  -10,123
  -10,399
  -10,693
  -11,007
  -11,342
Issuance/(repayment) of debt, $m
  4,997
  5,860
  6,760
  7,685
  8,624
  9,565
  10,501
  11,424
  12,329
  13,214
  14,078
  14,922
  15,748
  16,560
  17,360
  18,155
  18,950
  19,749
  20,558
  21,383
  22,230
  23,103
  24,008
  24,949
  25,933
  26,962
  28,043
  29,179
  30,376
  31,636
Issuance/(repurchase) of shares, $m
  510
  626
  733
  833
  924
  1,002
  1,066
  1,115
  1,148
  1,165
  1,102
  1,087
  1,056
  1,011
  954
  884
  803
  713
  614
  507
  394
  274
  150
  21
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  5,507
  6,486
  7,493
  8,518
  9,548
  10,567
  11,567
  12,539
  13,477
  14,379
  15,180
  16,009
  16,804
  17,571
  18,314
  19,039
  19,753
  20,462
  21,172
  21,890
  22,624
  23,377
  24,158
  24,970
  25,933
  26,962
  28,043
  29,179
  30,376
  31,636
Total cash flow (excl. dividends), $m
  3,155
  3,693
  4,246
  4,815
  5,393
  5,972
  6,548
  7,116
  7,673
  8,217
  8,662
  9,182
  9,690
  10,189
  10,682
  11,171
  11,660
  12,151
  12,649
  13,157
  13,678
  14,215
  14,772
  15,351
  16,069
  16,839
  17,644
  18,487
  19,369
  20,294
Retained Cash Flow (-), $m
  -1,291
  -1,520
  -1,754
  -1,994
  -2,237
  -2,482
  -2,724
  -2,964
  -3,199
  -3,428
  -3,653
  -3,872
  -4,086
  -4,296
  -4,504
  -4,710
  -4,916
  -5,124
  -5,334
  -5,548
  -5,767
  -5,994
  -6,229
  -6,473
  -6,728
  -6,995
  -7,276
  -7,570
  -7,881
  -8,208
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,864
  2,172
  2,492
  2,822
  3,156
  3,491
  3,824
  4,152
  4,474
  4,789
  5,010
  5,310
  5,604
  5,893
  6,178
  6,461
  6,743
  7,028
  7,316
  7,609
  7,911
  8,221
  8,543
  8,878
  9,341
  9,844
  10,369
  10,916
  11,488
  12,086
Discount rate, %
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
  1,720
  1,834
  1,911
  1,947
  1,941
  1,895
  1,812
  1,699
  1,561
  1,407
  1,222
  1,061
  902
  752
  615
  492
  385
  295
  221
  162
  116
  81
  55
  36
  23
  15
  9
  5
  3
  2
Current shareholders' claim on cash, %
  96.0
  92.2
  88.9
  85.9
  83.2
  80.9
  78.9
  77.1
  75.5
  74.2
  73.1
  72.1
  71.3
  70.6
  70.1
  69.6
  69.2
  68.8
  68.6
  68.4
  68.3
  68.2
  68.1
  68.1
  68.1
  68.1
  68.1
  68.1
  68.1
  68.1

CenterPoint Energy, Inc. is a public utility holding company. The Company, through its subsidiaries, owns and operates electric transmission and distribution facilities, and natural gas distribution facilities. The Electric Transmission & Distribution segment provides electric transmission and distribution services to retail electric providers. Its Natural Gas Distribution segment offers intrastate natural gas sales to and natural gas transportation and distribution for residential, commercial and industrial customers. Its Energy Services segment includes non-rate regulated gas sales and transportation and storage services for commercial and industrial customers. Its Midstream Investments segment includes equity investment in Enable that owns, operates and develops natural gas and crude oil assets. Its Other Operations segment includes office buildings and other real estate used in its business operations and other corporate operations.

FINANCIAL RATIOS  of  CenterPoint Energy (CNP)

Valuation Ratios
P/E Ratio 28
Price to Sales 1.6
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 6.3
Price to Free Cash Flow 23.6
Growth Rates
Sales Growth Rate 1.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10.7%
Cap. Spend. - 3 Yr. Gr. Rate 1.9%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 217.7%
Total Debt to Equity 269%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 1.8%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.9%
Return On Equity 12.5%
Return On Equity - 3 Yr. Avg. 3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 29.5%
EBITDA Margin - 3 Yr. Avg. 19.4%
Operating Margin 12.7%
Oper. Margin - 3 Yr. Avg. 11.8%
Pre-Tax Margin 9.1%
Pre-Tax Margin - 3 Yr. Avg. 1.1%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 1%
Effective Tax Rate 37%
Eff/ Tax Rate - 3 Yr. Avg. 35.6%
Payout Ratio 102.5%

CNP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNP stock intrinsic value calculation we used $9614 million for the last fiscal year's total revenue generated by CenterPoint Energy. The default revenue input number comes from 2017 income statement of CenterPoint Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CNP stock valuation model: a) initial revenue growth rate of 27.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.4%, whose default value for CNP is calculated based on our internal credit rating of CenterPoint Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of CenterPoint Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CNP stock the variable cost ratio is equal to 87.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CNP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for CenterPoint Energy.

Corporate tax rate of 27% is the nominal tax rate for CenterPoint Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CNP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CNP are equal to 140.9%.

Life of production assets of 10 years is the average useful life of capital assets used in CenterPoint Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CNP is equal to -5.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4688 million for CenterPoint Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 431 million for CenterPoint Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of CenterPoint Energy at the current share price and the inputted number of shares is $12.1 billion.

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COMPANY NEWS

▶ Reporter injured during Hurricane Harvey rescue attempt sues CenterPoint   [Aug-06-18 03:34PM  American City Business Journals]
▶ CenterPoint: 2Q Earnings Snapshot   [06:49AM  Associated Press]
▶ Houston was home to the largest U.S. utility deal in the second quarter   [Jul-26-18 07:15PM  American City Business Journals]
▶ Best NYSE Dividend Payers   [Jun-21-18 09:02AM  Simply Wall St.]
▶ CenterPoint: 1Q Earnings Snapshot   [06:42AM  Associated Press]
▶ CenterPoint Energy declares $0.2775 quarterly dividend   [Apr-26-18 06:05PM  PR Newswire]
▶ [$$] CenterPoint Energy to Buy Vectren for About $6 Billion   [Apr-23-18 11:54PM  The Wall Street Journal]
▶ CenterPoint paying $6 billion for Vectren   [11:29AM  Associated Press]
▶ [$$] CenterPoint Energy to Buy Vectren for About $6 Billion   [08:52AM  The Wall Street Journal]
▶ CenterPoint Energy to acquire Indiana-based rival for $6B   [08:48AM  American City Business Journals]
▶ CenterPoint Energy and Vectren to Merge   [06:30AM  PR Newswire]
▶ Best NYSE Dividend Payers   [Apr-19-18 09:02AM  Simply Wall St.]
▶ CenterPoint completes new Houston-area electric transmission line   [Apr-09-18 01:55PM  American City Business Journals]
▶ 5 of the Best Stocks to Buy After a Market Correction   [Apr-03-18 02:25PM  InvestorPlace]
▶ A NYSE or LSE listing for the $2T Saudi Aramco is still on the table   [Mar-12-18 11:04AM  Yahoo Finance Video]
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