CenterPoint Energy (CNP) Q3 2026 earnings review
CenterPoint Energy expands its grid plan, but sells more stock
CenterPoint Energy, the Texas and Midwest electric and gas utility, turned its long-promised power line study into a larger construction budget while issuing more stock to pay for it. Third-quarter profit per share excluding one-offs rose 6% to $0.53, or 13% by our math without a prior-year tax gain, as new customer rates and hot weather offset higher interest costs. Chief executive Jason Wells raised the 2026 profit plan by a penny and set a 2027 outlook for 9% growth, though by our math the 2026 target leaves fourth-quarter profit down 7% after the October sale of the Ohio gas business.
| Profit per share, excluding one-offs | $0.53 +6% from a year ago (+13% excluding last year's tax benefit) |
|---|---|
| 2027 profit per share outlook | $2.07–$2.09 middle of the range: 8.9% growth over raised 2026 plan |
| 10-year capital investment plan | $70.7B raised $4.0B; 2026–2030 plan raised $4.5B to $38.7B |
| Planned common stock sales (2026–2035) | $5.6B raised $1.6B from prior $4.0B plan |
⚖️ Verdict: 🟢 Bullish
The story got better because the utility added $4 billion of Houston transmission projects to its ten-year plan, extended its faster 7% to 9% profit growth target by two years through 2030, and regained a stable credit outlook from Moody's. One caution: the extra construction comes with $1.6 billion of new common stock sales through 2030, and the pool of large power projects eligible for fast-track Texas grid approval shrank by 2 gigawatts.
The question now is whether massive power demand in Houston will lift per-share profit growth above the 7% to 9% range or get absorbed by share dilution and customer bill credits. Bulls point to unbooked customer demand charges, while sceptics note that every capital increase so far has brought more stock sales and the same profit growth ceiling. ERCOT's December 2026 decision on base-load connections will test the schedule.
🐂 Bull Case
Transmission Study Adds $4 Billion to the Capital Plan
Utilities earn regulated profit by building power lines and pipes, a pool of assets called rate base. Chief executive Jason Wells had promised a transmission study for three quarters, and this release delivered it. CenterPoint Energy added $4 billion of "New transmission projects to unlock load-serving capability" in Houston, lifting its ten-year capital plan to $70.7 billion through 2035. It also pulled $1.5 billion of spending forward into 2026 through 2030.
- Five-year capital plan (2026–2030): $38.7 billion, up 13.2% from $34.2 billion by our math
- Rate base growth target: more than 14% a year through 2030, up from over 11% previously
- Long-term profit per share growth: mid-to-high end of 7% to 9% extended two years through 2030
- Unbooked opportunities: at least $10 billion of further grid and Indiana data-center projects
Wells said the expansion will drive "approximately $5 billion in savings for Texas residential and commercial customers over the next decade" because industrial users share fixed grid costs. The update matters because it turns power-demand forecasts into scheduled construction and extends the company's faster profit-growth target by two full years.
What to watch: the initial Indiana data-center customer announcement promised before year-end 2026. A signed contract would move part of the extra $10 billion opportunity list into the formal spending plan.
Moody's Lifts Its Outlook as Credit Metrics Recover
For over a year, credit-rating agency Moody's kept a negative outlook on the utility while storm recovery costs weighed on its cash flow. That pressure eased this quarter. Moody's revised its rating outlook to stable, and the company's ratio of funds from operations to debt (FFO to debt, a key credit measure) rose 0.3 percentage points from last quarter to 13.7% on Moody's adjusted basis.
On S&P's adjusted basis, the same cash-flow-to-debt ratio climbed 1.4 percentage points to 14.4%, clearing management's 14% target. The balance sheet also gained cash on October 1 when the utility closed the sale of its Ohio natural gas business and collected $1.4 billion of initial proceeds. That cash cushions the balance sheet as construction accelerates.
What to watch: year-end Moody's adjusted FFO to debt in the fourth-quarter report. A reading at or above 14% would put both agencies inside management's long-term target range.
Rate Recovery Carries Profit and Lifts the Outlook
Third-quarter profit per share, excluding one-offs, rose 6% from a year ago to $0.53. Last year's quarter included a one-time tax benefit of $0.03 per share; without that prior-year item, underlying profit per share grew 12.8% by our math. Approved rate increases for past grid investments added $0.09 per share, and hotter summer weather added $0.03, while operating and maintenance costs stayed flat.
Because regulatory rate trackers are landing on schedule, management raised its 2026 profit outlook by a penny and introduced a 2027 forecast of $2.07 to $2.09 per share. That 2027 target represents 8.9% growth at the middle of the range, sitting right at the top of the company's long-term promise.
What to watch: fourth-quarter operating and maintenance expenses. Keeping full-year operating costs down 1% to 2% is necessary to hit the raised 2026 target as Ohio gas earnings drop out.
🐻 Bear Case
Higher Capital Spending Brings $1.6 Billion of New Equity
For quarters, management argued that tax refunds, asset sales and customer demand charges would fund grid expansion without extra share sales. This quarter tested that claim. Alongside the $4 billion capital plan increase, CenterPoint Energy raised its ten-year common stock issuance plan by 40%, from $4 billion to $5.6 billion. All $1.6 billion of the new stock will be sold between now and 2030.
- Planned equity sales through 2030: about $4 billion, including $1.1 billion already priced
- Third-quarter financing drag: $0.04 per share ($0.03 from interest, $0.01 from share dilution)
- Implied diluted share count: up 1.8% from a year ago by our math
- 2026 capital spending plan: trimmed from $6.8 billion to $6.5 billion
The company also plans to use "credit supportive, higher equity content instruments" to protect its debt ratings. Selling more shares and paying higher interest explains why a 14% annual increase in rate base still produces only 7% to 9% growth in profit per share.
What to watch: whether future additions from the $10 billion opportunity list require still more stock sales. Any further increase above $5.6 billion would show that customer charges cannot bridge the funding gap.
Grid Screening Trims Eligible Large-Load Projects by Two Gigawatts
CenterPoint Energy's growth case rests on connecting data centers and factories in Houston, where Wells cited "a compelling pipeline of additional customer-driven investment opportunities". To join the Texas grid quickly, large projects must pass ERCOT's Batch Zero review, the state grid operator's initial screening batch. This quarter, the utility's eligible Batch Zero projects slipped from 14 gigawatts to 12 gigawatts.
Projects qualifying as studied load—those with one completed study awaiting capacity allocation—dropped from 4 gigawatts to 2 gigawatts, while unapproved requests rose from 3 gigawatts to 5 gigawatts. Meanwhile, current industrial demand was soft: total electric volume grew 1.1% from a year ago only because hot weather lifted residential use by 10.3%, while non-residential volume fell 3.7% by our math.
What to watch: ERCOT's official decision on the 10 gigawatts of base-load projects in December 2026, followed by the studied-load allocation in April 2027. Any cut below 10 gigawatts would delay construction.
Risks this quarter didn't answer
Three standing regulatory and legal risks received no update in the third-quarter earnings release or investor presentation.
- Indiana tracker investigations: state regulators opened two proceedings in July to review the automatic rate trackers that recover 85% of capital spend; orders in those cases will show if recovery slows.
- Storm litigation: gross-negligence claims from Hurricane Beryl and 220 lawsuits from the 2021 winter storm remain open with two insurers denying coverage; the quarterly Form 10-Q legal note will carry any court rulings.
- Transmission line routing costs: per-mile costs for 765-kilovolt lines range from $5 million to $20 million against an $8 million budget assumption; routing filings in early 2027 will set the actual price.
👓 Other Themes
Ohio Gas Sale Closes and Shifts Capital to Texas
On October 1, the utility completed the sale of its Ohio natural gas business for $2.4 billion in net proceeds, equal to 1.9 times its regulated asset value. The buyer paid $1.4 billion in cash and issued a one-year note at 6.5% interest for the remaining $1 billion, which matures in September 2027.Separately, mobile generators removed from Houston rates cost $19 million after tax, which management excludes from underlying profit.
💲 Other KPIs
Electric delivery volume rose 1.1% from a year ago after a flat second quarter, as 160 cooling degree days above normal in Houston drove a 10.3% jump in residential usage. Natural gas delivery rose 1.1% to 94 billion cubic feet, reversing a 7.2% drop last quarter. Metered customer counts grew 1.6% in electric and 0.8% in gas.
Total net debt rose 11.7% from a year ago and 8.4% from year-end 2025 to fund grid construction, though the company paid off all $500 million of short-term borrowings. Trailing twelve-month operating cash flow reached $2.83 billion, up 8.6% from a year ago and up from $2.58 billion in the second quarter.
🔮 Guidance
Raised. Management lifted both ends of the full-year range by one cent after holding the prior range for four straight quarters, pointing to 8.5% growth at the middle of the range. By our math, with $1.49 earned in the first nine months, the outlook leaves $0.42 for the fourth quarter—down 6.7% from $0.45 a year ago as Ohio gas earnings exit after the October 1 sale.
New. The initial 2027 plan calls for $2.08 at the middle of the range, or 8.9% growth over the raised 2026 outlook. The company also extended its target of growing profit per share at the mid-to-high end of 7% to 9% a year by two years, through 2030.
Raised. The ten-year spending plan rose by $4.0 billion, and the five-year plan through 2030 increased by $4.5 billion to $38.7 billion. For full-year 2026, however, the utility trimmed its capital budget from $6.8 billion to $6.5 billion; after $4.2 billion spent through September, that leaves $2.3 billion for the fourth quarter, up 35.3% from a year ago by our math.
Raised. To help fund the new transmission projects, planned common stock sales through 2035 rose by $1.6 billion. With $1.1 billion of forward stock sales already priced and settling by February 2027, the utility plans to issue about $2.9 billion of additional stock through 2030 and $1.6 billion between 2031 and 2035.
❓ Key Questions
Why did eligible studied-load projects drop by two gigawatts?
Projects expected to qualify as studied load in ERCOT's Batch Zero review fell from 4 gigawatts in the second quarter to 2 gigawatts this quarter. Did customers delay their timelines, or did ERCOT reject their single-study submissions?
Why was the 2026 capital budget cut by $300 million?
While the five-year spending plan jumped by $4.5 billion, estimated 2026 capital spending fell from $6.8 billion to $6.5 billion across both electric and gas. Did equipment delays push that $300 million into 2027?
How much hybrid debt is in the financing plan?
Presentation slides note a plan to use "credit supportive, higher equity content instruments" alongside the $1.6 billion common equity increase. How much preferred stock or junior subordinated debt is baked into the 2027 profit outlook?
Where does the first Indiana data-center contract stand?
Last quarter management hoped to announce a definitive agreement with a large Indiana electric customer before the end of 2026. Was there progress on that contract during the third quarter?