Are CenterPoint Energy Inc (CNP) shares trading below fair value?

InvestorsObserver gives CenterPoint Energy Inc (CNP) a low valuation rating of 7 based on its analysis. The proprietary rating system considers the underlying health of a company by analyzing its stock price, earnings and growth rate. CNP currently holds a better value than 7% of the shares based on these measures. Long-term buy-and-hold investors should find the valuation ranking system most relevant when making investment decisions.

CNP gets a rating rank of 7 today. Find out what this means for you and get the rest of the rankings on CNP!

Metrics analysis

CNP’s trailing 12-month price-to-earnings (PE) ratio of 13.3 puts it around the historical average of around 15. CNP is an average value at its current trading price, as investors are paying approximately what its value in relation to company profits. CNP’s trailing 12-month earnings per share (EPS) of 2.45 justifies what it is currently trading at in the market. However, rolling PE ratios do not take into account a company’s projected growth rate, causing some companies to have high PE ratios due to high growth, which could attract investors even if current earnings are weak. CNP currently has a 12-month PE-to-Growth (PEG) ratio of 6.1. The market is currently overvaluing CNP relative to its expected growth due to the fact that the PEG ratio is above the fair market value of 1. CNP’s PEG comes from its forward price to earnings ratio divided by its growth rate. Because PEG ratios include more fundamentals of a company’s overall health with an added focus on the future, they are one of the most widely used valuation measures by analysts.

Summary

CNP’s valuation metrics are low at its current price due to an overvalued PEG ratio due to strong growth. CNP’s PE and PEG are below the market average, which translates into a below-average valuation score. Click here for the full CenterPoint Energy Inc (CNP) stock report.

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