Key Insights
CenterPoint Energy's estimated fair value is US$24.36 based on Dividend Discount Model
CenterPoint Energy's US$30.84 share price signals that it might be 27% overvalued
The US$31.01 analyst price target for CNP is 27% more than our estimate of fair value
Does the June share price for CenterPoint Energy, Inc. (NYSE:CNP) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by projecting its future cash flows and then discounting them to today's value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. There's really not all that much to it, even though it might appear quite complex.
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.
Step By Step Through The Calculation
As CenterPoint Energy operates in the integrated utilities sector, we need to calculate the intrinsic value slightly differently. In this approach dividends per share (DPS) are used, as free cash flow is difficult to estimate and often not reported by analysts. Unless a company pays out the majority of its FCF as a dividend, this method will typically underestimate the value of the stock. We use the Gordon Growth Model, which assumes dividend will grow into perpetuity at a rate that can be sustained. The dividend is expected to grow at an annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.4%. We then discount this figure to today's value at a cost of equity of 6.1%. Compared to the current share price of US$30.8, the company appears slightly overvalued at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
Value Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)
= US$0.9 / (6.1% – 2.4%)
= US$24.4
NYSE:CNP Discounted Cash Flow June 5th 2024
Important Assumptions
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at CenterPoint Energy as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.1%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for CenterPoint Energy
Strength
Weakness
Opportunity
Threat
Next Steps:
Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Why is the intrinsic value lower than the current share price? For CenterPoint Energy, there are three important elements you should look at:
Risks: As an example, we've found 2 warning signs for CenterPoint Energy (1 can't be ignored!) that you need to consider before investing here.
Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for CNP's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
關鍵見解
根據股息折扣模型,CenterPoint Energy的公允價值估計爲24.36美元
CenterPoint Energy的30.84美元股價表明其估值可能高達27%
分析師對CNP的目標股價爲31.01美元,比我們對公允價值的估計高出27%
CenterPoint Energy, Inc.(紐約證券交易所代碼:CNP)六月份的股價是否反映了它的真實價值?今天,我們將通過預測股票的未來現金流來估算股票的內在價值,然後將其折現爲今天的價值。折扣現金流(DCF)模型是我們將應用的工具。儘管它可能看起來很複雜,但實際上並沒有那麼多。
但是請記住,有很多方法可以估算公司的價值,而DCF只是一種方法。如果您想了解有關折扣現金流的更多信息,可以在Simply Wall St分析模型中詳細閱讀此計算背後的理由。
逐步進行計算
由於CenterPoint Energy在綜合公用事業領域運營,我們需要以略有不同的方式計算內在價值。這種方法使用每股股息(DPS),因爲自由現金流難以估計,而且分析師通常不報告。除非公司將其大部分FCF作爲股息支付,否則這種方法通常會低估股票的價值。我們使用戈登增長模型,該模型假設股息將以可以持續的速度永久增長。預計股息將以相當於10年期國債收益率2.4%的5年平均增長率的年增長率增長。然後,我們將這個數字折現爲今天的價值,股本成本爲6.1%。與目前的30.8美元股價相比,該公司的估值在撰寫本文時似乎略有高估。但請記住,這只是一個近似的估值,就像任何複雜的公式一樣,垃圾進出。
每股價值 = 每股預期股息/(折現率-永久增長率)
= 0.9 美元/(6.1% — 2.4%)
= 24.4 美元
紐約證券交易所:CNP 貼現現金流 2024 年 6 月 5 日
重要假設
我們要指出的是,貼現現金流的最重要投入是貼現率,當然還有實際的現金流。如果你不同意這些結果,那就自己計算一下,試一試假設。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將CenterPoint Energy視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了6.1%,這是基於0.800的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
CenterPoint 能源的 SWOT 分析
力量
弱點
機會
威脅
後續步驟:
雖然重要,但DCF的計算只是公司需要評估的衆多因素之一。使用DCF模型不可能獲得萬無一失的估值。最好你運用不同的案例和假設,看看它們將如何影響公司的估值。例如,公司權益成本或無風險利率的變化會對估值產生重大影響。爲什麼內在價值低於當前股價?對於 CenterPoint Energy,您應該考慮三個重要元素:
風險:舉個例子,我們發現了 CenterPoint Energy 的 2 個警告信號(1 個不容忽視!)在這裏投資之前,您需要考慮這一點。
管理層:內部人士是否一直在提高股價以利用市場對CNP未來前景的情緒?查看我們的管理層和董事會分析,了解首席執行官薪酬和治理因素。
其他高質量的替代品:你喜歡一個優秀的全能選手嗎?瀏覽我們的高品質股票互動清單,了解您可能還會錯過什麼!
PS。Simply Wall St每天都會更新每隻美國股票的差價合約計算結果,因此,如果您想找到任何其他股票的內在價值,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂嗎?請直接聯繫我們。或者,也可以發送電子郵件至編輯團隊 (at) simplywallst.com。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。