CenterPoint Energy, Inc. (CNP) | The Buildout — AI Infrastructure
The Verdict
CenterPoint Energy is a public utility holding company. Its subsidiaries own the electric transmission and distribution wires and the natural-gas pipes that serve customers in Texas, Indiana, Minnesota and Ohio. It sits on the demand side of the AI buildout: hyperscale data centers, distributed-inference facilities and advanced manufacturing are landing in its Greater Houston service territory, and its job is to connect that load, recover the cost of the upgrades through regulated rates, and charge a demand fee once the power flows. It is not an AI supplier — it earns a regulated return on the capital it deploys to serve load.
| Market Cap | — |
| Revenue (TTM) | $9.6B |
| Revenue Growth | +7.1% |
| EBITDA Margin (TTM) | 40.6% |
| Net Debt | $24.6B |
| Earnings Beats | 2 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- The 14 GW of ERCOT batch-zero-eligible projects would represent over a 65% increase in Houston Electric's 21 GW system peak, and management expects nearly all of them to be energized by the end of 2030.
- The 10-year capital plan was raised $1.2B to $66.7B with no additional equity, and management cites at least $10B of further upside capital opportunities.
- Houston Electric rate base CAGR is guided at over 18% over the next three years.
- Adjusted FFO/debt improved to 13.4% in Q2 from 12.5% in Q1, with a Q3 CAMT refund expected to add roughly 30 basis points.
- About $900M of customer cash commitments and security has already been received for the large-load projects.
What We’re Watching
- 3 GW of viable batch-zero projects did not have their ERCOT studies approved, and management says the path is unclear.
- The 4 GW study-load cohort is not allocated until April 2027, and some projects may be delayed for construction.
- Indiana transmission and generation likely needs some equity, management said — the first qualification of the equity-free message.
- Moody's outlook remains negative, with no stated date for resolution.
The thesis is strengthening on the operating side: load commitments, the capital plan and credit metrics all moved favorably across two quarters while the earnings guide was held. The value-relevant changes sit outside the plan — the demand charges at roughly $6 million per gigawatt per month once energized, and the identified but unfunded Indiana and 3 GW tranches. The open question is conversion: how much of the 14 GW becomes energized load on the timeline management describes, and when the demand-charge revenue that is absent from the plan begins to appear.
Earnings
In Q2 2026 CenterPoint reported revenue of $2,152 million, gross margin of 86.9% and EBITDA of $979 million. Net income was $244 million. The standout item was balance-sheet validation on the load pipeline: about $900 million of customer cash commitments and security had been received, and the Houston batch-zero pipeline reached more than 17 GW submitted.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.2B | $3.0B | $1.9B | +10.7% |
| Gross margin | 86.9% | 67.4% | 28.7% | +5820bps |
| EBITDA | $979M | $1.1B | $787M | +24.4% |
| EPS | $0.37 | $0.48 | $0.30 | +21.0% |
| Adjusted FFO/debt | 13.4% | 12.5% | n/a | — |
We have not yet pulled in the benefit from the demand charges from these large customer loads.— Christopher A. Foster, CFO, 2026-07-28
Management tone: On the Q2 call management moved the Houston pipeline into a larger batch-zero opportunity and raised the capital plan $1.2 billion while keeping the equity guide unchanged. The tone was confident and growth-forward, with management giving sensitivity ranges and detailing upside it keeps outside the plan. Asked about Texas, the CEO said the company sees "no indication that growth is slowing" and described tailwinds as "accelerating, not decelerating." Management was also direct on the harder items — the 3 GW whose ERCOT studies were not approved, the Indiana equity caveat, and the unresolved Moody's outlook.
Management Guidance
Management reiterated FY2026 non-GAAP EPS guidance of $1.89 to $1.91, which at the midpoint represents 8% growth over actual 2025 delivered results. It reaffirmed long-term non-GAAP EPS growth at the mid-to-high end of 7%–9% through 2028 and 7%–9% annually through 2035. The 10-year capital plan was raised to $66.7 billion, up $1.2 billion, with $800 million for large-load system upgrades and $400 million for the Downtown Houston revitalization, and management said it expects to fund the increase without issuing additional equity. The company remains on track for $6.8 billion of 2026 capital investment and guides to end the year at the high end of its targeted FFO/debt cushion.
Trajectory
Revenue is seasonal, so quarter-to-quarter comparisons swing widely — $2,975M in Q1 2026 versus $2,152M in Q2 2026. Trailing-twelve-month revenue grew 7.1% year over year. The mix is shifting toward electric: in Q1 2026 electric revenue from contracts rose to $1,213M from $1,072M a year earlier, while natural-gas revenue fell to $1,760M from $1,883M as divestitures and mild weather weighed. Rate recovery has driven the earnings improvement for two straight quarters, contributing $0.11 in Q1 2026 and $0.10 in Q2 2026. Depreciation is climbing with the capital plan — electric D&A in Q1 2026 was $269M versus $210M a year earlier — which is the mechanical cost of putting capital into rate base.
The Model
The model projects FY+1 revenue of $9,844.5 million with EBITDA of $4,051 million (41.2% margin), and FY+2 revenue of $10,319.5 million with EBITDA of $4,406 million (42.7% margin). The near term is anchored by the rate base already funded in the $66.7 billion capital plan and by the regulatory trackers that recover roughly 85% of investments. FY+2 depends on how much of the large-load pipeline is energized and begins paying demand charges — revenue management explicitly keeps outside its current plan.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $9.4B | $9.8B | $10.3B |
| YoY Growth | — | +5.2% | +4.8% |
| EBITDA | $3.6B | $4.1B | $4.4B |
| EBITDA Margin | 38.9% | 41.2% | 42.7% |
Projections are the median of 4 independent model runs. The model’s revenue sits 4.6% below analyst consensus.
Management reiterated FY2026 non-GAAP EPS guidance of $1.89 to $1.91, which at the midpoint represents 8% growth over actual 2025 delivered results. It reaffirmed long-term non-GAAP EPS growth at the mid-to-high end of 7%–9% through 2028 and 7%–9% annually through 2035. The 10-year capital plan was raised to $66.7 billion, up $1.2 billion, with $800 million for large-load system upgrades and $400 million for the Downtown Houston revitalization, and management said it expects to fund the increase without issuing additional equity. The company remains on track for $6.8 billion of 2026 capital investment and guides to end the year at the high end of its targeted FFO/debt cushion.
What Could Go Right — and Wrong
- The 14 GW of batch-zero-eligible load energizes on schedule and begins paying demand charges that are not in the current plan.
- The 2H 2026 transmission study identifies a large set of projects, expanding the capital plan beyond $66.7 billion.
- Indiana large-load conversations convert into a definitive customer and a quantified investment.
- The 3 GW of non-approved projects finds a path through a future ERCOT batch process.
- The roughly $700 million already identified for the non-eligible 3 GW is folded into the plan.
- A material portion of the 14 GW cohort slips past the 2030 energization window management describes.
- The April 2027 study-load allocation delays construction for the 4 GW cohort.
- An Indiana equity issuance changes the financing profile of the build.
- A negative rating action raises the cost of a $66.7 billion ten-year build.
- Data-center and advanced-manufacturing demand proves cyclical and the pipeline stops growing.
Looking Ahead
The next twelve months turn on conversion and disclosure. The 2H 2026 transmission study is the largest unquantified piece of the forward capital plan; the Indiana definitive update is promised before the end of calendar year 2026; and the April 2027 ERCOT load allocation gates the 4 GW study-load cohort. On the financing side, the Ohio gas sale closes October 1, 2026, the CAMT refund lands in Q3 2026, and the Moody's outlook remains unresolved.
- Q3 2026CAMT refund — Expected to add roughly 30 basis points to FFO/debt.
- October 1, 2026Ohio gas sale closes — Regulatory approval received; supports financing flexibility.
- 2H 2026Transmission study update — Largest unquantified piece of the forward capital plan.
- Before end-2026Indiana definitive update — Finalizes a customer and any equity requirement.
- Q1 2027765 kV routing final — Refines cost-per-mile against the $8M assumption.
- April 2027ERCOT load allocation — Gates the 4 GW study-load cohort and its energization.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $8.6B | $9.4B | $9.6B | +8.3% |
| Gross Margin | 46.5% | 28.9% | 54.1% | 1,753bps |
| EBITDA | $3.4B | $3.6B | $3.9B | +6.2% |
| EBITDA Margin | 39.7% | 38.9% | 40.6% | 77bps |
| Net Income | $1.0B | $1.1B | $1.1B | +3.2% |
| Free Cash Flow | −$2.4B | −$2.4B | −$2.7B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)54.1%
- EBITDA Margin (TTM)40.6%
- Net Margin (TTM)11.6%
- ROIC4.9%
- FCF Conversion-69.1%
- SBC / Revenue0.0%
The Company
CenterPoint Energy is a public utility holding company whose operating subsidiaries own and operate electric transmission, distribution and generation facilities and natural-gas distribution systems. Its reportable segments are Electric, Natural Gas, and Corporate and Other, serving customers in Texas, Indiana, Minnesota and Ohio, and previously Louisiana and Mississippi. Its relevance to the AI buildout is location: management says Greater Houston holds about 25% of Texas electric demand on roughly 2.5% of the state's geography, and data centers and advanced manufacturing are landing there.
The electric business has two different halves. Houston Electric provides transmission and distribution in Texas and owns no generation in ERCOT, so large-load customers pay for interconnection system modifications directly. Indiana Electric provides transmission, distribution and generation and is vertically integrated, with a fleet that includes coal, gas, solar and landfill-gas units. The company has been shrinking its footprint and pointing capital at Texas and Indiana: the Louisiana and Mississippi gas businesses were divested, and the Ohio gas LDC sale is set to close October 1, 2026.
Business Segments
Competitive Landscape
Competition in this business is unusual. Within Greater Houston, CenterPoint is the incumbent regulated transmission and distribution utility, with about 10 GW of existing hosting capacity and a connect cost management cites at under $60 million per gigawatt. But the load itself is footloose — a hyperscaler choosing among Texas utilities, or weighing a non-utility powered-land-plus-PPA offer, is not captive to CenterPoint. The supply-chain intelligence frames the company as hard-to-replace within its own territory and replaceable in the broader market, competing for the same data-center customers, turbines and EPC labor as other utilities.
- American Electric Power (AEP)Named as a competitor in the supply-chain graph; not discussed in the calls or filings.
- Sempra (SRE)Named as a competitor in the supply-chain graph; not discussed in the calls or filings.
- TXNM Energy (TXNM)Named as a competitor in the supply-chain graph; not discussed in the calls or filings.
- PNMNamed as a competitor in the supply-chain graph; not discussed in the calls or filings.
- ATONamed as a Texas gas-distribution competitor in the supply-chain graph; not discussed in the calls or filings.
Supply Chain
CenterPoint sits at the load-serving end of the chain — buying construction, coal and natural gas, and selling regulated electric and gas delivery to data centers, manufacturers and metered customers. Its verified supplier read-through is Quanta Services; the 10-K names the coal and gas counterparties.
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