Value
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.7 |
| P/S | 8.2 |
| EV/EBITDA | 3.3 |
| Fwd P/E | 6.0 |
| PEG | 3.9 |
| Analyst target | 4.0 |
- ▸Forward P/E: 21.4x
- ▸PEG: 2.59
CNP · Why this verdict
Why CenterPoint Energy, Inc (Holdin (CNP) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.6/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is deeply negative — running at -462% of net income — meaning the company is consuming far more cash than it earns; reported earnings are not translating into available cash and the business relies heavily on capital markets financing. Quality breakdown | Free cash flow turns positive for 2 consecutive quarterly reporting periods, demonstrating that capital spending is generating returns sufficient to cover earnings-level cash outflows. | →Stable |
| CounterCapital-intensive regulated utilities routinely run negative free cash flow during large infrastructure investment cycles; the negative conversion ratio may reflect rate-base growth spending that will ultimately earn a regulated return, not an impairment of earnings quality. | ||
Two separate high-severity concentration risks are flagged: regulatory dependence on a single state regulator in Texas and reliance on a single named supplier, creating compounded vulnerability to adverse regulatory decisions or supply disruptions. Bear case | EPS surprise remains above 0% for 4 consecutive quarters, demonstrating that neither the regulatory nor the supplier concentration has materially impacted operating results. | →Stable |
| CounterRegulated utilities by design operate under a single state regulator; what appears as concentration risk is inherent to the utility business model, and regulators generally allow cost recovery that mitigates the financial impact of supplier disruptions. | ||
The stock is above the 200-day moving average with rising on-balance volume and a bullish MACD configuration, indicating constructive price momentum even though the stock has already exceeded its resistance target. Momentum breakdown | Price holds above the 200-day moving average for 90 consecutive calendar days, confirming the trend is structural rather than a short-term overshoot. | →Stable |
| CounterA stock trading above its resistance target in an overbought posture may reflect a momentum-driven overshoot; if the fundamental concerns around negative free cash flow and regulatory concentration surface, the momentum reversal could be swift. | ||
A forward P/E of 20.7x and a PEG of 2.50 screen as expensive for a regulated utility with modest growth, and the stock is already trading above its resistance target — at current levels the risk/reward is negative. Valuation breakdown | Forward P/E compresses below 16x from the current 20.7x as earnings growth catches up to the current multiple or price normalizes. | →Stable |
| CounterRegulated utility multiples often trade at premiums to stated growth rates due to dividend reliability and defensive positioning; a higher PEG may be sustained if the market is pricing in rate-base growth not yet visible in reported earnings. | ||
Free cash flow is deeply negative — running at -462% of net income — meaning the company is consuming far more cash than it earns; reported earnings are not translating into available cash and the business relies heavily on capital markets financing.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive for 2 consecutive quarterly reporting periods, demonstrating that capital spending is generating returns sufficient to cover earnings-level cash outflows.
CounterCapital-intensive regulated utilities routinely run negative free cash flow during large infrastructure investment cycles; the negative conversion ratio may reflect rate-base growth spending that will ultimately earn a regulated return, not an impairment of earnings quality.
Two separate high-severity concentration risks are flagged: regulatory dependence on a single state regulator in Texas and reliance on a single named supplier, creating compounded vulnerability to adverse regulatory decisions or supply disruptions.
→StableBear case
- Expectation
- EPS surprise remains above 0% for 4 consecutive quarters, demonstrating that neither the regulatory nor the supplier concentration has materially impacted operating results.
CounterRegulated utilities by design operate under a single state regulator; what appears as concentration risk is inherent to the utility business model, and regulators generally allow cost recovery that mitigates the financial impact of supplier disruptions.
The stock is above the 200-day moving average with rising on-balance volume and a bullish MACD configuration, indicating constructive price momentum even though the stock has already exceeded its resistance target.
→StableMomentum breakdown
- Expectation
- Price holds above the 200-day moving average for 90 consecutive calendar days, confirming the trend is structural rather than a short-term overshoot.
CounterA stock trading above its resistance target in an overbought posture may reflect a momentum-driven overshoot; if the fundamental concerns around negative free cash flow and regulatory concentration surface, the momentum reversal could be swift.
A forward P/E of 20.7x and a PEG of 2.50 screen as expensive for a regulated utility with modest growth, and the stock is already trading above its resistance target — at current levels the risk/reward is negative.
→StableValuation breakdown
- Expectation
- Forward P/E compresses below 16x from the current 20.7x as earnings growth catches up to the current multiple or price normalizes.
CounterRegulated utility multiples often trade at premiums to stated growth rates due to dividend reliability and defensive positioning; a higher PEG may be sustained if the market is pricing in rate-base growth not yet visible in reported earnings.
TrendMatrix Research · core thesis
Engine thesis — one sentence
CNP's free cash flow is deeply negative at -462% of net income, the forward P/E of 20.7x with a PEG of 2.50 is not inexpensive for a utility with modest growth, and the stock has already exceeded its resistance target — two high-severity concentration risks (single-state regulatory exposure and a single supplier) compound the fundamental concerns even as the technical price trend remains constructive.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.2 |
| ROA | 1.9 |
| Gross margin | 5.2 |
| Op margin | 8.8 |
| Net margin | 5.7 |
| Current ratio | 4.5 |
| FCF quality | 0.0 |
| Moat | 4.5 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -462% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
3.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 3.3 |
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 8.9 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 5.1 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 5.5 |
| erm sentiment | 5.0 |
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.1 |
| quality rank | 3.5 |
| growth rank | 1.5 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.4 |
| support resistance | 1.5 |
| 52w position | 9.7 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.8 |
| days to cover | 2.0 |
| volatility | 7.6 |
| put call | 0.0 |
| implied vol | 6.9 |
| beta | 10.0 |
| debt equity | 2.8 |
- ▸Elevated put/call: 2.50
- ▸Concentration risks: 2 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 3.6 |
| dividend safety | 4.8 |
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:19d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.9=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.88
Upside
-6.9%
Downside
7.9%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.9=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.88 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.1, Momentum at 5.8, and Insider at 5.1; the weakest are Peer rank at 3.0, Growth at 3.1, and Technical at 4.2. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.88 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deeply Negative Free Cash Flow
Trip ifFree cash flow rises above $0 for 2 consecutive quarterly reporting periods.
- P2Dual High Severity Concentration Risks
Trip ifEPS surprise remains above 0% for 4 consecutive quarters.
- P3Positive Momentum Above Moving Average
Trip ifPrice falls below the 200-day moving average for 20 consecutive trading days.
- P4Stretched Valuation Above Target
Trip ifForward P/E multiple compresses below 16x from the current 20.7x.