Any thoughts on the company?


Red line 200 MA

24 Mar 2015 "Deutsche Bank cuts Centrica to 'sell' from 'hold', target cut from 280p to 225p"

Centrica: Undervalued and High Yielding

Centrica is a four star stock according to Morningstar analysts, meaning the energy provider is undervalued - all while paying a 4.67% yield

Centrica (CNA) has achieved steady earnings and dividend growth despite reduced retail gas and power demand and a large tax increase on North Sea gas production. The solid financial performance during tough macroeconomic times was due to its strategy of hedging roughly 50% of its retail energy sales with its own assets. However, owing to the declining production in the aging Morecambe gas fields, Centrica has made several acquisitions of gas properties and increased its exploration to maintain this effective hedge level.

The key to continued earnings and dividend growth will be the amount of oil and gas Centrica produces from these acquisitions and the success of its exploration programs. Both create risk for investors. Still, we believe the company's strong balance sheet and diverse earnings can support its attractive dividend.

Centrica is also betting on the success of its retail strategy in the U.S. The mid-2013 acquisition of Hess’ energy marketing business makes Centrica the largest business gas supplier on the East Coast and the second-largest business power supplier in the U.S. Whether this integration along the retail energy chain can create a moat (competitive advantage) remains to be seen.

If natural gas prices rise from current levels, Centrica's new investments in natural gas production should result in strong earnings growth.

Centrica's 270 MW Lincs offshore wind farm and the company's large development pipeline of offshore wind projects position the company well in case the U.K. government elects to pursue offshore wind for reducing carbon from power generation.

The British Gas brand name has contributed to strong growth in the residential HVAC maintenance and heating system installation businesses.

But retail energy prices have risen significantly the past few years, and political pressure to keep prices low for homeowners is a headwind for earnings growth in the retail energy business. The increase in the supplementary corporation tax on North Sea gas production also puts an additional burden on Centrica's ability to grow earnings and hedge its retail natural gas sales.

Any thoughts on chart support levels? Nothing immediately obvious as solid support above 310p. (Next divi date mid April 2014)

Disposal

CENTRICA TO SELL TEXAS GAS-FIRED POWER STATIONS AND EXTEND ITS SHARE REPURCHASE PROGRAMME

Centrica plc’s North American subsidiary, Direct Energy, has agreed to sell its Texas gas-fired power stations to Blackstone for $685 million (£420 million) in cash. The three units, located in Paris, Bastrop, and Mission, have a combined capacity of 1,295MW. As part of the transaction, Direct Energy has also entered into a three year call option arrangement for an equivalent amount of capacity with Blackstone.

Badar Khan, President and CEO of Direct Energy, said: “This transaction allows us to realise value from our gas-fired fleet, while ensuring stability of price and supply in the Texas power market through the call option arrangement.”

“Residential retail supply is key to our North American business, and with sufficient generation capacity in Texas, we can support our downstream business through contractual arrangements, rather than asset ownership.”

Centrica plc will return the proceeds from this sale to shareholders through a £420 million extension of its share repurchase programme, which will be conducted over the course of 2014.

Sorry I can't offer on support levels H/C, but just feel that these have been grossly overdone, will come back sometime so happy to collect the divi in the meantime.

On today's news, it looks like it was @323.50p :-)

sp slipping 316p following Barclays downgrade TP 285p, will they be able to maintain their dividend?

CNA is desperately in need of a shake up starting at the top, sp is at a 12 month low in spite of large share buy back scheme (complete waste of shareholders funds) designed to fool investors into thinking earnings per share are growing. Political rumblings are likely to increase as we get nearer the general election, sell.

halifax, I wonder whether the sp weakness can in part be attributed to the ramifications of fracking, ie how will the prices asked by the big five energy providers be affected when fracking really gets going. We are told that fuel prices will be lower, so won't their margins get squeezed?
2517

2517 you may well be right but significant revenue from fracking is at least five years away. CNA has in any case already spent millions in buying into fracking as well as wasting a great deal of shareholders money on wind farms and it is time institutional investors voiced their dissatisfaction by replacing the board of directors.

Final Results

GOOD STRATEGIC PROGRESS, HELPING SECURE FUTURE GAS SUPPLIES FOR THE UK

Group wide £500 million cost reduction programme completed

Engaging with all stakeholders to improve understanding and rebuild trust

£14 billion of new gas supply agreements signed with Cheniere and Qatargas, taking the

Group’s gas and power supply commitments to over £60 billion

£2.6 billion invested in the year, including:

Over £1.5 billion of organic investments, predominantly in North Sea E&P, including in major projects such as Cygnus

C$1 billion Canadian upstream gas acquisition, in partnership with Qatar Petroleum International

The acquisition of a 25% stake in the Bowland shale exploration licence in the UK
$1.2 billion Hess Energy Marketing acquisition, delivering a step-change in North America B2B

£650 million of divestments of selected E&P assets, UK wind assets and US power stations, for value

Adding value through 56mmboe of organic reserve additions, principally in Norway, however £699 million pre-tax (£318 million post-tax) exceptional impairments of UK

Southern North Sea projects and existing Canadian gas assets
£420 million share repurchase programme in 2014 following sale of Texas CCGTs; recommending a 4% increase in the full year dividend to 17.0 pence per share

Recommended final divi 12.08p

Ex-divi 23 Apr 2014.
Will be very interesting to see what the brokers say, as the yield is very attractive.

Deutsche Bank note today:
"Centrica reported FY results this morning in line with our and Inquiry Financial provided consensus estimates. However there was a c. £700m write down of North Sea and Canadian assets and the company said that it expects adjusted EPS to be lower YOY, partly due to adverse weather in N America and the UK. Rising costs in upstream production were flagged again, while the company will seek to turn around customer losses which amounted to 360k in British Gas Residential. With the competition review by regulators still due in March we would not see any weakness today as a buying opportunity.
Centrica reported adjusted operating profits of £2,695m (4% below DBE and 6% below consensus) but adjusted EPS was in-line and flat YOY at 26.6p/share and the DPS was up c.4% to 17.0p/share, roughly in line with expectations. British Gas Residential lost 360k customers and profits for British Gas as a whole were down 6% yoy partly due to rising commodity and social/environmental costs (reduced by the government to allow a 3.2% price drop from January 2014).
The company guidance that adjusted EPS is expected to be lower yoy is likely to bring down consensus estimates (we expect a high single digit consensus downgrade). We remain concerned that all three main divisions are facing headwinds. The UK competition assessment in March seems increasingly likely to call for a full Competition Commission review. Meanwhile all North Sea gas producers are facing rising cash costs, and retailers in North America are seeing a margin squeeze."

Ex-divi wed 23rd Apr (12.08p)

Have been watching this one carefully for a while now, but even so have managed to miss the boat.
EDIT: Bought in at 329p

Credit Suisse has raised its recommendation for British Gas owner Centrica from ‘underperform’ to ‘neutral’ after the stock’s recent underperformance.

Seems to have had a good effect on the sp. Profit and the divi.....now that would be nice!

Good call Harry - I bailed here a while ago unfortunately!

Note from HSBC today:
"Cutting the coat to fit the cloth – for Centrica in 2014 this means cost reduction and efficiency, new growth, political engagement: It has been 12 months since Centrica’s management announced a strategy announcement to focus investment on the US rather than the UK. This strategy was vindicated by the prospect of intervention in the UK supply market by the Labour party if elected to government in 2015 and the lack of political drive to offer attractive investment incentives for new gas-fired generation. At the FY results on 20 February, management pointed out that 20% of Centrica’s customers are already on a fixed-price contract so progress has been made on encouraging customers to fix prices, which helps to mitigate political risk. It also defended its integrated and UK/US model as sheltering from volatility, giving it scale in gas contracts, and allowing UK leverage from a growing US liberalised market. In 2014 it intends to drive growth in British Gas residential and ‘harvest’ its upstream assets, cutting upstream investment by 20% to GBP900m for the next three years.
Hidden value in upstream: Management announced at the FY results that 155mmboe of 2P gas reserves had been added, some 56mmboe organically from its own assets, after a rapid phase of expansion. We set out as a small example recent exploration drilling success in the Butch Norwegian field. Centrica is the field operator, and has a 40% stake. Its near field exploration wells indicate the potential for a four-fold increase in field size. In the Butch Main field 50-60mmboe has been discovered. We value Faroe Petroleum’s (FPM LN, OW(V), 201p) 15% stake at GBP143m, implying a value for Centrica of GBP381m.
Target price raised to 380p from 350p; rating upgraded to OW from Neutral. Our target is based on the average of three methodologies – DCF, DDM and SOTP. We have also included the Butch asset valuation in our sum of parts and increased our long-term dividend growth assumption. Lower capex in upstream has increased FCF but still will generate additional FCF as Centrica shifts its attention to higher producing areas such as Norway and the US and away from the UK. Lower storage earnings have offset some of the Butch benefit in our SOTP though."

StockMarketWire.com
Centrica bought back 1,000,000 ordinary shares yesterday at an average price of 330.1746p each to be held in treasury.