CNP 4Q2016 Earnings Quick Note

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Market Price (2/28/2017): $27.32/share; ST-Target: $28/share; NIV: $44/share

Lower-risk but not necessarily lower return; continues to perform well

Note: Please note that due to 5 companies (NRG, CNP, PNM, LNG, SRE) reporting on one day, we will be writing Quick Notes for all of the companies reporting today followed by full notes later in the week

  • Maintaining 2017E AEPS guidance of $1.25-$1.33 and 4%-6% CAGR in AEPS through 2021
    • 2017E Net income break-down: Utilities: $0.93-$0.97 and Mid-stream $0.31-$0.37 of which some $50MM in operating income is expected to be achieved from Energy Services
  • However, guiding 2018E AEPS to achieve upper-end or to exceed 4%-6% from 2017 actual
    • Assuming mid-point of 2017E guidance of some $1.29 and 6% growth in AEPS in 2018, this would place 2018E AEPS at some $1.37, close to our current estimate of $1.36 vs. consensus of $1.28
  • Achieved 4Q2016 AEPS of $0.26 vs. our and consensus estimate of $0.28
  • Going forward, CNP is expected to be a full cash tax payee
  • 2017 and 2018 earnings power looks to be coming from not just regulatory filings at the utilities but also from demographics and Enable as well
  • Strategic initiative on Enable progressing slowly:

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