Core Insights - The Federal Reserve cut interest rates by 25 basis points, marking the second cut this year, but investor sentiment remained low due to comments from Fed Chairman Jerome Powell regarding future rate cuts [1][5][10] Interest Rate Cut - The Federal Reserve's benchmark policy rate is now in the range of 3.75-4% following the quarter percentage point cut [5] - Powell indicated that while another rate cut in December is not ruled out, various factors need to be considered, leading to uncertainty among investors [6][8] Inflation and Labor Market - Inflation is nearing the Fed's 2% target, but concerns persist due to rising commodity prices influenced by tariffs [7] - The labor market is weakening, with fewer job additions, raising recession concerns, and the rate cut was primarily aimed at supporting this struggling market [8] Defensive Stock Recommendations - Defensive stocks from the utilities and consumer staples sectors are recommended to mitigate market volatility, including: - **Atmos Energy Corporation (ATO)**: Expected earnings growth of 8.1%, beta of 0.74, and dividend yield of 1.99% [9][10][11] - **CenterPoint Energy, Inc. (CNP)**: Expected earnings growth of 8.6%, beta of 0.57, and dividend yield of 2.23% [12][13] - **Duke Energy Corporation (DUK)**: Expected earnings growth of 7.3%, beta of 0.44, and dividend yield of 3.39% [14][15] - **Service Corporation International (SCI)**: Expected earnings growth of 8.8%, beta of 0.89, and dividend yield of 1.58% [16][17] Investment Strategy - The recommended investment strategy focuses on low-beta stocks with high dividend yields and favorable Zacks rankings to provide stability in a volatile market [4][10]

Core Insights - CenterPoint Energy, Inc. (CNP) reported third-quarter 2025 adjusted earnings of 50 cents per share, exceeding the Zacks Consensus Estimate of 46 cents by 8.7% and reflecting a 61.3% increase from the previous year's figure of 31 cents [1][8] - The company's GAAP earnings were 45 cents per share, marking a 50% increase from the prior-year quarter's figure of 30 cents [1] CNP's Revenues - CNP generated revenues of $1.99 billion, surpassing the Zacks Consensus Estimate by 0.5% and showing a 7.1% increase compared to the year-ago quarter's revenue of $1.86 billion [2][8] CNP's Operational Results - Total expenses for the third quarter increased by 3.8% year over year to $1.49 billion [3] - The company reported an operating income of $502 million, up from $424 million in the prior year [3][8] - Interest expenses and other finance charges totaled $238 million, reflecting a 24.6% increase from $191 million recorded in the previous year [3] CNP's Financial Condition - As of September 30, 2025, CenterPoint Energy had cash and cash equivalents of $37 million, an increase from $24 million as of December 31, 2024 [4] - The total long-term debt was $19.40 billion, down from $20.40 billion as of December 31, 2024 [4] - Net cash flow from operating activities amounted to $1.71 billion, compared to $1.25 billion in the year-ago period [4] CNP's Capital Expenditure - The total capital expenditure was $3.39 billion as of September 30, 2025, compared to $2.50 billion in the prior year [5] CNP's 2025 Guidance - CenterPoint Energy expects to generate adjusted earnings per share in the range of $1.75-$1.77, with the Zacks Consensus Estimate for 2025 earnings at $1.76 per share, aligning with the midpoint of the company's guidance [6] CNP's Zacks Rank - CNP currently holds a Zacks Rank 2 (Buy) [7]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share (EPS) of $0.45 on a GAAP basis and $0.50 on a non-GAAP basis for Q3 2025, representing a 60% increase from $0.31 in Q3 2024 [2][14][8] - The company reiterated its full-year 2025 non-GAAP EPS guidance range of $1.75 to $1.77, indicating a 9% growth over 2024 results of $1.62 per share [9][22] Business Line Data and Key Metrics Changes - Throughput in the Houston Electric business increased by 9% year to date, with industrial customer class throughput up over 17% quarter over quarter and over 11% year to date [7][8] - The company filed for interim capital recovery trackers at Houston Electric, with a $15 million annual revenue requirement increase approved and a $55 million increase pending [16] Market Data and Key Metrics Changes - The greater Houston area is experiencing diverse growth drivers, with significant increases in industrial activity, particularly in energy refining, processing, and exports [7][36] - The Port of Houston saw an 18% increase in exports quarter over quarter, contributing to the strong demand for electric services [36] Company Strategy and Development Direction - The company introduced a 10-year financial plan with a capital investment plan of at least $65 billion, focusing on economic development and operational efficiency [4][5] - The recent sale of the Ohio Gas LDC is expected to generate approximately $2.6 billion in gross proceeds, allowing for reinvestment in higher growth jurisdictions, particularly in Texas [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving non-GAAP EPS growth at the mid to high end of the 7% to 9% annual guidance from 2026 through 2028, and 7% to 9% annually through 2035 [9][23] - The company is focused on disciplined capital allocation and enhancing its investment portfolio in Texas, which will represent 70% of its investments post-Ohio sale [19][12] Other Important Information - The company anticipates closing the Ohio Gas LDC transaction in Q4 2026, which will provide additional flexibility for future capital investments [11][19] - The company is targeting a trailing 12 months adjusted FFO-to-debt ratio of 14%, with expectations for improvement through upcoming securitization bonds [21] Q&A Session Summary Question: How is the company viewing balance sheet capacity from the Ohio transaction? - Management indicated that the transaction will reduce operational debt and provide a net benefit of approximately $400 million to the plan [31][32] Question: What sectors are driving the industrial sales growth in Texas? - Management noted strong demand from energy refining, processing, and exports, with significant activity at the Port of Houston contributing to growth [36] Question: Can you provide more details on the asset sale and its impact on earnings? - The sale is expected to be beneficial for financing and earnings, with a reduction in cash lag and plans to reinvest in Texas gas and electric projects [45][46] Question: What is the timeline for the Advanced Metering Infrastructure rollout? - The pilot for the new metering infrastructure is expected to begin in 2026, with broader deployment anticipated in 2027 [56][57] Question: How does the company view the opportunities in mobile generation assets? - Management highlighted strong market conditions for medium-sized units and plans to remarket larger units by early 2027, which could provide cash flow benefits [60][61]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share (EPS) of $0.45 on a GAAP basis and $0.50 on a non-GAAP basis for Q3 2025, representing a 60% increase compared to $0.31 in Q3 2024 [2][7][13]. - The company reiterated its full-year 2025 non-GAAP EPS guidance range of $1.75-$1.77, indicating a 9% growth over 2024 results of $1.62 per share [8][22]. Business Line Data and Key Metrics Changes - Throughput in the Houston Electric business increased by 9% year to date, with industrial customer class throughput up over 17% quarter over quarter and over 11% year to date [6]. - The company filed for interim capital recovery trackers at Houston Electric, with a $15 million annual revenue requirement increase approved and a $55 million increase pending approval [15]. Market Data and Key Metrics Changes - The greater Houston area is experiencing significant growth, with peak load demand forecasted to increase by 10 GW by 2031, representing a nearly 50% increase over the next six years [5]. - The company anticipates that electric load demand will double to approximately 42 GW by the middle of the next decade, supporting a strong investment profile [5]. Company Strategy and Development Direction - The company introduced a 10-year financial plan with a capital investment plan of at least $65 billion, focusing on economic development, operational efficiency, and value for investors [4]. - The recent sale of the Ohio Gas LDC is expected to generate approximately $2.6 billion in gross proceeds, allowing for redeployment into higher growth jurisdictions, particularly in Texas [9][10]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving non-GAAP EPS growth at the mid to high end of the 7%-9% annual growth guidance from 2026 through 2028 and 7%-9% annually through 2035 [6][23]. - The company highlighted the importance of a diverse set of growth drivers in the Houston area, which is not reliant on any single industry [6]. Other Important Information - The company expects to close the Ohio Gas LDC transaction in Q4 2026, with after-tax net cash proceeds of approximately $2.4 billion to be redeployed into capital investments [10][18]. - The company is focused on maintaining a strong balance sheet and has derisked over a billion dollars of equity needs through forward sales [21][22]. Q&A Session Summary Question: Balance sheet capacity from the Ohio transaction - Management indicated that the transaction would improve the FFO-to-debt ratio and allow for additional capital expenditures [29][31]. Question: Local feedback on the Ohio transaction - Management reported positive reception and support from local leadership regarding the transaction [32]. Question: Sales growth in Texas and driving sectors - Management noted strong throughput growth driven by diverse sectors, including data centers and energy refining [35][36]. Question: Data center activity in Indiana - Management expressed optimism about data center opportunities in Indiana, highlighting excess capacity and regulatory support [37][39]. Question: Accretive nature of the Ohio asset sale - Management confirmed that the sale would be beneficial for financing and earnings, with plans to redeploy funds into Texas projects [44][46]. Question: Seller's note and its impact - Management described the seller's note as a straightforward instrument that would support earnings in 2027 [48]. Question: AMI rollout timeline - Management indicated that AMI investments would begin in 2026, with a pilot program planned for that year [54][56]. Question: Mobile generation asset opportunities - Management discussed strong market conditions for medium-sized units and plans to remarket larger units in 2027 [58][60]. Question: Impact of HB 4384 legislation - Management confirmed that the benefits of the legislation are included in the current investment plan, with potential for further enhancements [62].

Financial Data and Key Metrics Changes - The company reported diluted earnings per share (EPS) of $0.45 on a GAAP basis and $0.50 on a non-GAAP basis for Q3 2025, representing a 60% increase compared to $0.31 in Q3 2024 [2][12][7] - The full-year 2025 non-GAAP EPS guidance range is reiterated at $1.75 to $1.77, indicating a 9% growth over 2024's delivered results of $1.62 per share [8][22] Business Line Data and Key Metrics Changes - The Houston Electric business experienced a 9% increase in throughput year-to-date, with industrial customer class throughput up over 17% quarter-over-quarter and over 11% year-to-date [6][7] - The company filed for interim capital recovery trackers at Houston Electric, with a $15 million annual revenue requirement increase approved and a $55 million increase pending [15][12] Market Data and Key Metrics Changes - The greater Houston area is experiencing diverse growth drivers, with a forecasted peak load demand increase of 10 gigawatts by 2031, representing nearly a 50% increase over the next six years [5][6] - The company anticipates electric load demand on its system to double to approximately 42 gigawatts by the middle of the next decade [5] Company Strategy and Development Direction - The company introduced a 10-year financial plan with a capital investment plan of at least $65 billion, focusing on economic development, operational efficiency, and value for investors [4][11] - The recent sale of the Ohio Gas LDC is expected to generate approximately $2.6 billion in gross proceeds, allowing for redeployment into higher growth jurisdictions, particularly in Texas [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving non-GAAP EPS growth at the mid to high end of the 7% to 9% annual growth guidance from 2026 through 2028, and 7% to 9% annually through 2035 [8][23] - The company highlighted the strong reception of the Ohio transaction from local leadership and the positive outlook for continued service quality [29] Other Important Information - The company expects to close the Ohio Gas LDC transaction in Q4 2026, with after-tax net cash proceeds of approximately $2.4 billion to be redeployed into capital investments [10][18] - The company is focused on maintaining a strong balance sheet, with a trailing 12 months adjusted FFO-to-debt ratio of 14% [20] Q&A Session Summary Question: Balance sheet capacity from the Ohio transaction - Management indicated that the transaction would improve the FFO-to-debt ratio and allow for additional capital expenditures [28] Question: Sales growth in Texas - Management attributed strong sales growth to diverse drivers, including data center activity and increased exports at the Port of Houston [31] Question: Earnings accretion from the asset sale - Management confirmed that the sale would be beneficial for financing and earnings, with plans to reallocate funds into Texas projects [38] Question: Advanced Metering Infrastructure (AMI) rollout - The next generation of AMI investments is expected to begin in 2026, with a pilot program to be run that year [45] Question: Mobile generation assets and market opportunities - Management discussed the strong market for medium-sized units and the potential cash flow benefits from remarketing larger units in 2027 [48]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share (EPS) of $0.45 on a GAAP basis and non-GAAP EPS of $0.50 for Q3 2025, representing a 60% increase compared to the same period last year [3][9][16] - The full year 2025 non-GAAP EPS guidance is reiterated at a range of $1.75 to $1.77, indicating a 9% growth over 2024 results of $1.62 per share [10][26] Business Line Data and Key Metrics Changes - Throughput in the Houston Electric business increased by 9% year-to-date, with industrial customer class throughput up over 17% quarter-over-quarter and over 11% year-to-date [8][9] - The company filed for interim capital recovery trackers at Houston Electric, with a $15 million annual revenue requirement increase approved and a $55 million increase pending approval [19] Market Data and Key Metrics Changes - The Greater Houston area is experiencing significant growth, with peak load demand forecasted to increase by 10 gigawatts by 2031, representing nearly a 50% increase over the next six years [6][7] - The company anticipates electric load demand on its system to double to approximately 42 gigawatts by the middle of the next decade [7] Company Strategy and Development Direction - The company introduced a ten-year financial plan with a capital investment plan of at least $65 billion, focusing on economic development, operational efficiency, and value for investors [5][6] - The recent sale of the Ohio Gas LDC is expected to generate approximately $2.6 billion in gross proceeds, allowing for capital redeployment into higher growth jurisdictions [11][12][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving non-GAAP EPS at the mid to high end of the 7% to 9% annual growth guidance from 2026 through 2028, and 7% to 9% annually through 2035 [8][11][26] - The company highlighted the strong demand from diverse sectors in the Greater Houston area, including energy refining and data centers, contributing to robust sales growth [40][41] Other Important Information - The company expects to close the Ohio Gas LDC transaction in 2026, which will enhance balance sheet capacity and provide flexibility for future capital investments [12][22] - The company is focused on maintaining a strong balance sheet, with a trailing twelve-month adjusted funds from operations (FFO) to debt ratio of 14% [24][25] Q&A Session Summary Question: Balance sheet capacity from the Ohio transaction - Management indicated that the transaction would improve FFO to debt metrics and allow for less reliance on equity financing, potentially reducing the equity assumption from 47% to lower levels [33][35] Question: Local feedback on the Ohio deal - Management reported positive reception and support from local leadership regarding the transaction [37] Question: Sales growth in Texas - Management attributed strong sales growth to diverse drivers, including data center activity and increased exports at the Port of Houston [40][41] Question: Data center activity in Indiana - Management expressed optimism about data center opportunities in Indiana, highlighting excess capacity and proactive steps to manage rate increases [44][46] Question: Asset sale and earnings impact - Management confirmed that the Ohio sale would be beneficial for financing and earnings, with plans to redeploy proceeds into Texas projects [52][53] Question: Seller's note and capital plan - Management described the seller's note as a straightforward instrument that supports the capital allocation plan and provides clarity for future earnings [55] Question: AMI rollout timeline - Management indicated that the next generation of AMI investments would begin with a pilot in 2026, with broader deployment expected in 2027 [62][64] Question: Mobile generation opportunities - Management noted strong market conditions for medium-sized units and plans to remarket larger units in 2027, which could provide cash flow benefits [67][68] Question: Contribution from recent legislation - Management confirmed that the benefits of recent legislation are incorporated into the capital investment plan, with potential for further enhancements [70]

Core Insights - The U.S. stock market is at a critical inflection point, influenced by a government shutdown and economic uncertainty, while the utility sector is experiencing a resurgence due to AI and data-driven infrastructure [1][2] Utility Sector Performance - The utility sector is witnessing record electricity demand, primarily driven by data centers, which is expected to enhance load growth and top-line growth for major utilities in Q3 [2][6] - U.S. power demand increased by 2.3% year-over-year through September, largely attributed to growth in data center hubs [7] Earnings Outlook - The total earnings for the utility sector are projected to decline by 2.4% despite a revenue growth of 5.8% in Q3 [10] - PG&E Corp is expected to report earnings of 46 cents per share on revenues of $6.55 billion, indicating a year-over-year bottom-line growth of 24.3% and top-line improvement of 10.2% [10] - CenterPoint Energy is anticipated to report earnings of 46 cents per share on revenues of $1.98 billion, suggesting a year-over-year bottom-line growth of 48.4% and top-line improvement of 6.6% [11] Financial Considerations - The utility sector is capital-intensive, and while recent Federal Reserve rate cuts may provide some relief, the cost of debt for funding infrastructure projects remains a critical concern [8][9] - Higher interest expenses may have negatively impacted the sector's bottom line, necessitating close monitoring of how utilities manage their balance sheets and growth funding [9][13] Investment Opportunities - The current environment presents a timely opportunity for ETF investors to evaluate funds positioned to benefit from the utility sector's performance amid electrification and AI expansion [3][14] - ETFs such as Utilities Select Sector SPDR Fund, Vanguard Utilities ETF, and others provide exposure to the sector's long-term growth story while mitigating risks associated with individual companies [14]

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Core Viewpoint - CenterPoint Energy (CNP) reported quarterly earnings of $0.5 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, and showing an increase from $0.31 per share a year ago, indicating a positive earnings surprise of +8.70% [1] Financial Performance - The company achieved revenues of $1.99 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.87%, and up from $1.86 billion year-over-year [2] - Over the last four quarters, CenterPoint has exceeded consensus revenue estimates three times [2] Stock Performance - CenterPoint shares have increased approximately 26.2% since the beginning of the year, outperforming the S&P 500's gain of 13.9% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for continued outperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.50 on revenues of $2.33 billion, and for the current fiscal year, it is $1.76 on revenues of $9.15 billion [7] - The trend of estimate revisions for CenterPoint was favorable ahead of the earnings release, suggesting potential positive adjustments in future earnings expectations [6] Industry Context - The Utility - Electric Power industry, to which CenterPoint belongs, is currently ranked in the top 22% of over 250 Zacks industries, indicating a strong industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Third Quarter 2025 Investor Update CenterPoint Energy | 1 Cautionary Statement and Other Disclosures This presentation and the oral statements made in connection herewith contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this presentation and the oral statements made in connection herewith are forward-looking statements made in good fa ...